EUR/USD leaps to daily highs near 1.1170 ahead of FOMC
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EUR/USD leaps to daily highs near 1.1170 ahead of FOMC

  • EUR/USD gathers momentum and tests 1.1170, daily peaks.
  • The greenback comes under pressure, probes sub-98.00 zone.
  • Attention shifts to the FOMC minutes later in the day.

EUR/USD is prolonging the choppy trade so far this week, always navigating the lower bound of the recent range in the mid-1.1100s.

EUR/USD now focused on FOMC

Spot remains under pressure so far this week, although sellers have not quite succeeded in dragging it further south of weekly lows near 1.1140 recorded yesterday. The likelihood of another visit to YTD lows in the 1.1100 neighbourhood, however, stays well on the cards against the current fragile backdrop.

In the meantime, US-China trade effervescence and the recent announcement regarding Chinese smartphone maker Huawei appears to have lent some support to the riskier assets.

Later in the day, all the attention will be on the release of the FOMC minutes and particularly on the Committee’s views on the health of the US economy and the absence of upside traction weighing on consumer prices.

What to look for around EUR

Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable through H1 2020. The broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with the now stalled US-China negotiations and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections due later this week.

EUR/USD levels to watch

At the moment, the pair is gaining 0.11% at 1.1170 and a break above 1.1217 (23.6% Fibo of the 2019 drop) would target 1.1237 (55-day SMA) en route to 1.1264 (high May 1). On the downside, the next support lines up at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017).

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