- EUR/USD remains consolidative in the mid-1.1100s.
- EMU flash CPI failed to ignite further upside traction.
- US ADP report surpassed estimates at 156K in July.
EUR/USD has lost some upside momentum in the mid-1.1100s so far today against the backdrop of the generalized consolidative scenario ahead of the FOMC event.
EUR/USD focused on Fed and Payrolls
The pair exchanges gains with losses in the upper end of the range in response to the increasing cautiousness in the global markets, all ahead of the key FOMC meeting due in the European evening.
Spot is seen under scrutiny via USD-dynamics later today. In fact, and despite a 25 bps interest rate cut is already priced in, market participants will closely follow the statement and the subsequent speech by Chief Powell in search for further details on the Fed’s plans on rates and its perspectives on the US economy in the next months.
Back to the docket, EMU’s advanced inflation figures now see the headline CPI rinsing 1.1% in July and Core prices advancing 0.9% (from 1.1%). Additionally, the economy in the region is expected to expand 0.2% inter-quarter during the April-June period and 1.1% on a yearly basis.
Across the pond, the US private sector created 156K jobs in July, a tad above estimates, according to the latest report by ADP.
What to look for around EUR
The single currency is expected to remain under scrutiny in the next weeks amidst ECB’s preparations for a fresh wave of monetary stimulus, including a potential reduction of interest rates, the re-start of the QE programme and a probable tiered deposit rate system. The ECB has already changed its forward guidance and it now expects rates to remain at ‘present or lower levels’ until at least mid-2020. The unremitting deterioration of the economic outlook in the region and the lack of traction in inflation are seen limiting any occasional bullish attempts in EUR for the time being and also give extra sustain to the dovish stance in the ECB.
EUR/USD levels to watch
At the moment, the pair is losing 0.05% at 1.1149 and faces the initial support at 1.1101 (2019 low Jul.25) seconded by 1.1021 (high May 8 2017) and finally 1.0839 (monthly low May 11 2017). On the upside, a breakout of 1.1233 (55-day SMA) would target 1.1286 (high Jul.11) en route to 1.1302 (200-day SMA).
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