The single currency maintains the bid bias unchanged and prompts EUR/USD to navigate in the 1.0150 zone ahead of the FOMC gathering due later in the NA session.
EUR/USD met some decent support near the 1.0100 region on Tuesday, sparking a subsequent bounce to the 1.0170/75 band on Wednesday ahead of the key FOMC gathering.
On this, all the bets keep leaning towards a 75 bps hike, although market participants are expected to scrutinize Powell’s press conference, where the battle around inflation and the next steps regarding the fed’s normalization process are predicted to be in the centre of the discussion.
Earlier in the euro calendar, Germany’s Consumer Confidence dropped to record low in August (-30.6), as concerns around the energy crunch remain on the rise. Similar path followed the readings in France and Italy for the current month.
Results across the ocean saw MBA Mortgage Applications contract 1.8% in the week to July 22, Durable Goods Orders expand 1.9% MoM in June and the trade deficit shrinks to $98.18B also in June. Later in the session, Pending Home Sales and the EIA report on US crude oil supplies will close the calendar.
EUR/USD regains the smile somewhat following Tuesday’s deep drop to the boundaries of the 1.0100 region.
The pair extends its range bound stance, as market participants continue to gauge the latest ECB announcements and appear cautious ahead of the upcoming FOMC event later on Wednesday.
In the meantime, the price action around the European currency closely follows increasing speculation of a probable recession in the euro area, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
Key events in the euro area this week: Germany GfK Consumer Confidence (Wednesday) – EMU Final Consumer Confidence, Economic Sentiment, Germany Flash Inflation Rate (Thursday) – Germany Unemployment Change, Unemployment Rate, Flash Q2 GDP, EMU Flash Inflation Rate, Advanced Q2 GDP (Friday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Performance of the economic recovery post-pandemic in the region. Impact of the war in Ukraine on the region’s growth prospects and inflation.
So far, spot is gaining 0.31% at 1.0146 and a breakout of 1.0278 (weekly high July 21) would target 1.0438 (55-day SMA) en route to 1.0615 (weekly high June 27). On the other hand, initial contention emerges at 1.0107 (weekly low July 26) seconded by 1.0000 (psychological level) and finally 0.9952 (2022 low July 14).
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EUR/USD came under heavy bearish pressure and dropped toward 1.0150 in the American session on Friday. The data from the US showed that Nonfarm Payrolls rose by 528K in July, compared to the market expectation of 250K, and provided a boost to the greenback.
GBP/USD declined sharply toward 1.2000 on Friday after the impressive US July jobs report triggered a dollar rally. Nonfarm Payrolls grew at a much stronger pace than expected and annual wage inflation stayed unchanged at 5.2%, reviving hawkish Fed bets.
Gold turned south in the second half of the day on Friday and fell toward $1,770. After the US data showed Nonfarm Payrolls rose by 528,000 in July, the benchmark 10-year US Treasury bond yield gained more than 6%, weighing heavily on XAU/USD.
Cardano price is ready to rally after triggering the same pattern for the fourth time in the last two months. This development could provide buyers and traders with a quick and easy setup to capitalize on.
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