EUR/USD steadies above 1.20 as markets await FOMC minutes

  • Today's data shows healthy activity in the manufacturing sector in the U.S.
  • DXY loses momentum ahead of 92.
  • FOMC December meeting minutes is coming up next.

After advancing to its best level in nearly four months at 1.2080 on Tuesday, the EUR/USD pair reversed course today and retreated toward the 1.20 mark as the USD started to recover its recent losses. As of writing, the pair was consolidating its daily losses near 1.2020 and losing 0.3% on the day as investors are waiting for the FOMC to release the December meeting minutes.

Manufacturing activity continues to expand in the U.S.

Today's data from the U.S. showed that the business activity in the manufacturing sector continued to expand with the ISM Manufacturing PMI improving to 59.7 in December from 58.2 in November and surpassing the experts' estimate of 58.1. The underlying details of the report revealed that the raw material price inflation rose for the 22nd consecutive month.

Assessing the ISM report, ING analysts wrote, "the report offered more indication that pipeline inflation pressures are building with the prices paid component at 69.0. Given the strong growth story and the likelihood that inflation will continue creeping higher, we continue to look for three Federal Reserve interest rate hikes in 2018."

On the back of the upbeat data, the US Dollar Index refreshed its session high at 91.95 but couldn't preserve its bullish momentum and was last seen at 91.82, where it was up 0.28% on the day.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet, writes, "the 4 hours chart for the pair shows that it met buying interest around a bullish 20 SMA, as the Momentum indicator keeps heading lower within positive territory, but the RSI pared its decline and attempts to recover around 63, indicating that selling interest is still limited. A positive surprise from US upcoming figures could boost the greenback temporarily, but as mentioned above, the dominant bullish trend remains firmly in place, which means that speculative interest will be looking to buy on retracements."

According to the analyst, supports for the pair could be seen at 1.2000, 1.1960 and 1.1920 while resistances align at 1.2065, 1.2100 and 1.2140.

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