- EUR/USD reversed its direction after dropping below 1.1700.
- FOMC-inspired US Dollar Index rally lost momentum on Thursday.
- Wall Street's main indexes are posting impressive gains.
Following Wednesday's sharp decline, the EUR/USD pair spent the first half of the day moving sideways below 1.1700. With the greenback coming under renewed selling pressure during the American session, the pair gained traction and reached a daily high of 1.1751. As of writing, EUR/USD was up 0.5% on the day at 1.1745.
DXY reverses course
The FOMC's hawkish policy outlook seen in the Summary of Economic Projections and Chairman Jerome Powell's comments about asset tapering starting as soon as the next meeting provided a boost to the USD on Wednesday. Reflecting the broad-based USD strength, the US Dollar Index (DXY) climbed to its highest level in more than a month at 93.52.
However, the positive shift witnessed in market sentiment caused the DXY to push lower in the second half of the day. Currently, the index is losing 0.45% at 93.03. Supported by heightened hopes about the Chinese real-estate giant Evergrande avoiding a default, the S&P 500 Index is rising 1.45% on the day at 4,459.
Earlier in the day, the data from the US revealed that the weekly Initial Jobless Claims rose to 351,000 from 335,000 previously. Additionally, the Markit Manufacturing PMI declined to 60.5 in September's flash estimate while the Services PMI edged lower to 54.4 from 55.1. Nevertheless, these disappointing readings had little to no impact on risk perception.
On Friday, IFO Business Climate and Current Assessment data from Germany will be looked upon for fresh impetus. Later in the day, the August New Home Sales report will be featured in the US economic docket.
Technical levels to watch for
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
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