EUR/USD struggles for direction near 1.2130 ahead of FOMC

EUR/USD trades within a tight range near 1.2130.
German yields climb to the -0.23% area on Wednesday.
All the attention stays on the FOMC meeting later in the session.

Pablo Piovano FXStreet

The shared currency alternates gains with losses and motivates EUR/USD to gyrate around the 1.2130 region on Wednesday.

EUR/USD looks to the Fed

EUR/USD now looks offered around 1.2130, always against the backdrop of the generalized consolidation in the global markets, as investors get ready for the FOMC event later in the NA session.

In the meantime, the pair pays little attention to the recovery in yields of the German 10-year reference to the -0.23% area following a drop to the vicinity of -0.30% in past sessions. Investors’ sentiment and price action around spot remains largely dependent on whatever happens at the FOMC event later on Wednesday.

Nothing scheduled data wise in Euroland, although the most salient event will be the FOMC gathering. Additional data in the US will come from the housing sector and the weekly report by the EIA.

What to look for around EUR

EUR/USD manages to bounce of recent lows in the sub-1.2100 area, although it is forecast to remain somewhat vigilant ahead of the Fed event later this week and while market participants keep digesting the latest US inflation figures. In the meantime, support from the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity and the investors’ appetite for riskier assets.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.

EUR/USD levels to watch

So far, spot is losing 0.02% at 1.2123 and a breakdown of 1.2092 (monthly low Jun.11) would target 1.2064 (23.6% Fibo retracement of the November-January rally) en route to 1.2051 (weekly low May 13). On the flip side, the next hurdle lines up at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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