EUR/USD to continue lower, critical support seen at 1.2125

FXStreet Team FXStreet

Fresh demand for the greenback has sent EUR/USD below 1.22 and critical support at 1.2125 is again at risk. Talk of Fed tapering, America's vaccination advantage and US stimulus are set to boost the dollar, Yohay Elam, an Analyst at FXStreet, reports.

See – EUR/USD to experience further corrective weakness – Credit Suisse

Key quotes

“Fed Vice-Chair Richard Clarida and Governor Lael Brainard will be speaking later in the day. Any further mention of tapering may support the dollar – even though markets are waiting for a speech by Jerome Powell, the Fed Chairman.”

“The new administration is taking office next Wednesday and Treasury Secretary nominee Janet Yellen has confirmation hearings scheduled for Tuesday, raising hopes of immediate action. Investors expect Biden to announce a package worth around $3 trillion, but the scope is still to be seen.”

“The US has an advantage over Europe on the vaccination front. Washington authorized releasing vaccines to anyone aged 65 or older. The world's largest economy administered at least one dose to nearly 3% of the population while figures in European countries are barely around 1%.”

“Euro/dollar is still holding onto the 200 SMA and more importantly, the critical support line at 1.2125. That level is a triple bottom after cushioning EUR/USD twice in December and now in early January as well. Below 1.2125, the next levels to watch are 1.21, 1.2075, and 1.2160.”

“Resistance awaits at the daily high of 1.2225, followed by 1.2240, which is where the 50 SMA hits the price.”

Author

FXStreet Team

FXStreet

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold picks pace, flirts with $5,000

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and pushing higher towards the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.