- EUR/USD spikes to 1.0198 and quickly pulls back to 1.0160.
- US dollar and euro among top performers on Wednesday.
- Market participants await FOMC minutes.
The EUR/USD continues to move sideways on Wednesday around 1.0160/70 ahead of the release of the FOMC minutes. The pair made a run to 1.0198, hitting the highest level in two days but it quickly pulled back toward 1.0160. Economic data released in the US showed Retail Sales stagnated in July, against expectations of a 0.1% increase. The details of the report were above market consensus. Later on Wednesday, the Federal Reserve will release the minutes of its latest meeting when it raised the Fed Funds rate by 75 basis points. Market participants will look for clues about the next steps of the central bank.
Analysts at Brown Brothers Harriman expect the minutes to come in very hawkish. “It wasn’t until Chair Powell’s post-decision press conference that markets saw what they believed was a dovish pivot, when he acknowledged the pace of future rate hikes will depend on incoming data (…) Because the Fed has embarked on a corrective communication effort since that meeting, the minutes should reveal more about the Fed’s hawkish thinking then.” Such a scenario could be bullish for the US dollar.
The DXY is up by 0.22% on Wednesday, supported by higher yields and risk aversion. The euro is also gaining ground. EUR/CHF is up sharply for the second day in a row, recovering almost a hundred pips from record lows, approaching 0.9700. EUR/GBP is at two-day highs near 0.8450 despite higher-than-expected UK inflation data.
Short-term outlook
The EUR/USD continues to move sideways under the 20-day Simple Moving Average, today at 1.0210 and also still looking at the 1.0100/10 critical support. A break under 1.0100 should clear the way to more weakness. On the flip side, above 1.0210, the euro could strengthen. Still, a consolidation above 1.0270 is needed for a test of the 55-day SMA that capped the rally last week, currently at 1.0335.
Technical levels
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.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.