- EUR/USD remains well supported by the underlying bearish sentiment surrounding the USD.
- Expectations that the Fed is done raising rates and a positive risk tone undermine the buck.
- The recent hawkish remarks by ECB officials lend some support ahead of the FOMC minutes.
The EUR/USD pair enters a bullish consolidation phase during the Asian session on Tuesday and oscillates in a narrow trading band just below mid-1.0900s, or its highest level since August 14 touched the previous day.
The US Dollar (USD) remains depressed near its lowest in more than two months in the wake of growing acceptance that the Federal Reserve (Fed) is done with its policy-tightening campaign. In fact, the markets have priced out the possibility of any additional rate hikes and expect that the US central bank may start to cut rates soon. Meanwhile, expectations for the Fed's future policy action dragged the yield on the benchmark 10-year US government bond to a two-month low. Apart from this, the risk-on environment is seen undermining the safe-haven Greenback and acting as a tailwind for the EUR/USD pair.
That said, Fed officials have still not ruled out the possibility that more rate hikes could be needed should a change in economic data require it. In fact, Richmond Fed President Thomas Barkin said on Monday that inflation is likely to remain stubborn and force the central bank to keep interest rates higher for longer than investors currently anticipate. This, in turn, raises the uncertainty over the timing of when the Fed will begin cutting rates. Hence, Tuesday's release of the FOMC meeting minutes, due later during the US session, will be scrutinized closely for cues about the Fed's future policy action.
The outlook, in turn, will determine the next leg of a directional move for the buck and the EUR/USD pair. Heading into the key event risk, the recent hawkish remarks by the European Central Bank (ECB) officials, pushing back against expectations for early rate cut bets, should lend support to the major. Bundesbank President Joachim Nagel said on Friday that it would be unwise to start cutting interest rates too soon. Moreover, ECB policymaker Robert Holzmann argued that the second quarter was simply too soon for a rate cut. This, in turn, suggests that the path of least resistance for spot prices is to the upside.
There isn't any relevant market-moving macro data due for release from the Eurozone on Tuesday, leaving the EUR/USD pair at the mercy of the USD price dynamics. The US economic docket, meanwhile, features Existing Home Sales data, though might do little to provide any impetus ahead of ECB President Christine Lagarde's appearance at an event in Berlin and the crucial FOMC meeting minutes. Nevertheless, the aforementioned fundamental backdrop favours bullish traders, suggesting that any meaningful corrective decline might be seen as a buying opportunity and is more likely to remain limited.
Technical levels to watch
|Today last price||1.0947|
|Today Daily Change||0.0005|
|Today Daily Change %||0.05|
|Today daily open||1.0942|
|Previous Daily High||1.0952|
|Previous Daily Low||1.0898|
|Previous Weekly High||1.0909|
|Previous Weekly Low||1.0665|
|Previous Monthly High||1.0695|
|Previous Monthly Low||1.0448|
|Daily Fibonacci 38.2%||1.0931|
|Daily Fibonacci 61.8%||1.0918|
|Daily Pivot Point S1||1.0909|
|Daily Pivot Point S2||1.0876|
|Daily Pivot Point S3||1.0855|
|Daily Pivot Point R1||1.0963|
|Daily Pivot Point R2||1.0985|
|Daily Pivot Point R3||1.1018|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.