Search ForexCrunch
  • EUR/USD moves higher and clinches daily highs near 1.1750.
  • A move to 1.18 and beyond remains on the cards in the short-term.
  • The FOMC interest rate decision will take centre stage later on Wednesday.

The single currency regains the smile and pushes EUR/USD back to the mid-1.1700s on Wednesday.

EUR/USD bid ahead of FOMC

EUR/USD is quickly fading Tuesday’s bearish performance and it has regained traction well above 1.17 the figure, opening the door to a potential visit to recent 22-month peaks in the 1.1780/85 band.

In the meantime, the focus of attention remains on the progress of the economic recovery in the Old Continent vs. the pick-up in COVID-19 outbreaks across the world, which has already sparked fears of a second wave of the coronavirus pandemic ahead of the fall and winter.

In the docket, Spanish Retail Sales contracted at an annualized 4.7% in June, while Producer Prices are due in Italy later in the session. The most important event, however, will be the FOMC event across the pond. Consensus among investors sees no change in the monetary policy stance although the Fed could probably strengthen its forward guidance and could shed further detail on the potential implementation of yield curve control (YCC).

Furthermore, market participants expect Chief Powell’s press conference to gyrate around the health of the US economy and prospects of recovery in the current context.

What to look for around EUR

EUR/USD advanced to levels last seen in June 2018 near 1.1780 on Monday, confirming once again the solid momentum around both the single currency and the rest of its risky peers. The sharp move up, while largely triggered by dollar-selling, has found extra sustain in auspicious results from the domestic docket, in turn supporting further the view of a strong economic recovery following the coronavirus fallout. Also lending wings to the momentum around the euro, the recently clinched deal on the European Recovery Fund helped putting political fears within the region to rest (for now), while the solid position of the current account in the region adds to the rally.

EUR/USD levels to watch

At the moment, the pair is gaining 0.27% at 1.1747 and a breakout of 1.1781 (2020 high Jul.27) would target 1.1815 (monthly high Sep.24 2018) en route to 1.1852 (monthly high Jun.14 2018). On the other hand, immediate contention is located at 1.1495 (monthly high Mar.9) seconded by 1.1448 (50% Fibo of the 2017-2018 rally) and finally 1.1422 (monthly high Jun.10).