EUR/USD flirting with highs beyond 1.1800 ahead of ECB

The now softer tone around the greenback allows EUR/USD to extend yesterday’s post-FOMC rebound and clinch daily highs further north of 1.1800 the figure.

EUR/USD focused on ECB

Spot briefly dropped to the 1.1730 region on Wednesday after the Federal Reserve delivered a 25 bp rate hike, as was widely anticipated.

The updated ‘dots-plot’ hinted at the likeliness of a fourth rate hike this year, lending initial support to the buck. However, Chief Powell confirmed later that the Committee would allow some overshooting of the inflation, forcing the greenback to give away those gains and move into the negative territory.

Later in the day, the ECB will hold its meeting. Despite the central bank is not expected to move on rates, all the attention will be on the potential discussion of the timing of the end of the ongoing bond-buying programme and the start of the tightening cycle.

In the data space, German final inflation figures for the month of May are due later, whereas Retail Sales, Initial Claims and Export/Import Prices are all due across the pond.

EUR/USD levels to watch

At the moment, the pair is up 0.14% at 1.1808 and a breakout of 1.1840 (high Jun.7) would target 1.1854 (38.2% Fibo of 1.2413-1.1508) en route to 1.1998 (high May 14). On the downside, the initial support aligns at 1.1756 (10-day sma) seconded by 1.1728 (21-day sma) and finally 1.1617 (low Jun.1).