EUR/USD Price Tumbling Under 1.13 as Fed’s Pressure Mounts

• The EUR/USD is under pressure as traders position for the Fed.
• The ECB meeting on Super Thursday will be a critical day for the euro.
• Central banks’ divergence issues will determine the direction of EUR/USD.

The EUR/USD price continues to trade unchanged throughout the day as markets await the outcome of the two-day FOMC meeting. Currently, the single currency is trading at 1.1260 in the range of 1.1250-70.

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On Tuesday, the US dollar gained slight ground against most of the G10, while the EUR/USD pair rose in London, trading to 1.1320 and then fell to 1.1260 in New York as the data revealed the shocking truth about US inflationary dynamics.

In November, the US PPI rose 0.8%, indicating continued high inflation in the United States. Following the report, US yields surged to +9.6 y/y, exceeding expectations and posting their biggest gain since then. This has been a fundamental change since 2009. Government bond yields rose from 0.64% to 0.66%, while 10-year bond yields rose from 1.42% to 1.44%.

In response to rising inflation, the Fed is expected to increase the pace of tapering monthly bond purchases. Chairman Powell will hold a press conference in 30 minutes following the announcement and quarterly projections.

TD Securities analysts expect that the rate of contraction will double to $30 billion per month in March, which marks the end of quantitative easing. A more aggressive tone may also be conveyed through the explanation, economic forecast, and scatter chart. The average is expected to increase by 50 basis points in 2022.

In terms of rates, analysts say the market is designed to end quantitative easing sooner. Inflation tolerance and the appearance of the curve will be sensitive to reports of price increases.

According to analysts, not enough is being done in forex to counterbalance the dollar’s resilience as other central banks’ decisions are expected to be softer than the Fed’s.

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EUR/USD price technical analysis: Bearish dominance below 1.1300

The EUR/USD price is well below the 1.1300 key figure and the 20-period and 50-period SMAs on the 4-hour chart. So far, the pair has marked a 27% average daily range, which is a bit lower than usual.

The upthrust bar with a high volume suggests a bearish bias for now. Hence, the price may see a drift towards 1.1200. On the upside, 1.1300 will be the key hurdle for the buyers.

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