EUR/USD fights back after plumbing to a new 2021 low yesterday on hawkish Federal Reserve (Fed) and dovish commentary from European Central Bank (ECB) policymakers. Economists at Société Générale do not rule out a bounce towards the 1.1750 level.
In vicinity to crucial support
“Fed tapering could commence in November or December and will end somewhere in the middle of next year. The contrast with the (dovish) comments of ECB member Villeroy speaks for itself and was a reminder of the gulf that exists in policy on both sides of the Atlantic, a theme that will continue into 2022.”
“We assume that Villeroy and Lane represent the majority (unanimity?) of the governing council and this speaks of the dangers of even lower levels that could lie ahead for the single currency when the ECB next meets in two weeks.”
“EUR/USD is near potential support of weekly Ichimoku cloud and peak of March 2020 at 1.1495/1.1450.”
“A bounce is expected however 1.1750 could cap upside.”
“Next potential supports could be 1.1380 and 1.1290, the 61.8% retracement from March 2020.”
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