- EUR/USD gained strong intraday traction following the release of upbeat Eurozone PMI prints.
- The prevalent bearish sentiment surrounding the USD remained supportive of the positive move.
- Disappointing US retail sales failed to provide any respite to the USD; focus remains on FOMC.
The EUR/USD pair maintained its bid tone through the early North American session, albeit has retreated around 30 pips from multi-year tops set earlier this Wednesday.
The pair caught some aggressive bids and finally broke out of its two-day-old consolidative trading range in reaction to the better-than-expected release of German/Eurozone PMI prints for December. The strong intraday positive move was further supported by the prevalent bearish sentiment surrounding the US dollar.
In fact, the USD dropped to fresh two-and-half-year lows amid firming expectations for a new COVID-19 relief package and the optimism over the rollout of vaccines for the highly contagious disease. This, along with hopes for a Brexit deal, boosted investors’ confidence and further undermined the safe-haven greenback.
The USD remained depressed and failed to gain any respite from worse-than-expected US monthly Retail Sales figures. The headline sales declined by 1.1% in November as against the 0.3% fall anticipated. Adding to this, sales excluding autos also fell short of market expectations and declined by 0.9% during the reported month.
Meanwhile, the market had a rather muted reaction to the disappointing macro data as the focus remains on the highly anticipated FOMC monetary policy update. The Fed is scheduled to announce its policy decision later during the US session and is widely expected to keep the key overnight interest rate pinned near zero.
Hence, the key focus will be on the accompanying monetary policy statement and updated economic projections. Apart from this, the Fed Chair Jerome Powell’s comments at the post-meeting press conference will be looked upon for clues about the central bank’s policy outlook, which, in turn, would influence the USD.
Technical levels to watch
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