FOMC Meeting Minutes In Focus
The EUR/USD pair ended the day at $1.1708, with a high of $1.1786 and a low of $1.1708. Despite the poorer-than-expected Retail Sales data from July, the EUR/USD currency pair lost ground for the second time in a row on Tuesday, owing to the continued strength of the US dollar, which was fueled by increasing demand as a safe-haven currency.
In response to recent encouraging events, the US Dollar Index (DXY) rose and regained strength on Tuesday, reaching 93.17. On a 10-year Treasury note, the yield also rose on Tuesday after falling for three straight sessions, reaching 1.28 percent, supporting the greenback, and weighing on riskier markets like the EUR/USD.
Political uncertainty arose due to the Afghan government's unexpected fall, putting market sentiment under strain. President Joe Biden blamed former US President Donald Trump for the issue, and these geopolitical worries boosted safe-haven appeal in the market, supporting the greenback and putting pressure on the riskier asset EUR/USD. Furthermore, as the rising number of coronavirus infections prompted fears about the economy's recovery, the US dollar gained value based on its safe-haven status. The spread of the Delta coronavirus was accelerating in many regions of the world, lowering chances for economic recovery and strengthening the dollar, leaving EUR/USD less valuable.
On the data front, the Flash Employment Change jumped to 0.5 percent against the anticipated 0.2 percent at 14:00 GMT, bolstering the Euro, which capped additional losses in EUR/USD. With predictions of 2.0 percent, the Flash GDP for the quarter remained unchanged.
On the US side, the TIC Long-Term Purchases from June held steady at 01:00 GMT, with estimates of 110.9B. At 17:30 GMT, Core Retail Sales fell by 0.4 percent in July, versus a forecast of 0.2 percent, weighing on the US dollar and causing more losses in EUR/USD. Retail Sales also fell in July, falling by -1.1 percent against expectations of -0.2 percent, putting pressure on the US dollar, which helped the EUR/USD pair recover some of its losses.
At 18:15 GMT, Industrial Production climbed by 0.9 percent in July, vs a forecast of 0.5 percent, bolstering the US dollar and adding to the loss in the EUR/USD pair. The Capacity Utilization Rate also increased to 76.1 percent, up from 75.7 percent projected, bolstering the US dollar and keeping EUR/USD under pressure for the day. Business Inventories for June remained unchanged at 19:00 GMT, against projections of a 0.8 percent increase. The NAHB Housing Market Index dipped to 75 in August from an expected 80, weighing on the US dollar and adding to EUR/negative USD's pressure.
Nevertheless, Federal Reserve Chairman Jerome Powell spoke on Tuesday that the spread of coronavirus is unlikely to have a significant influence on the economy's revival. He said that the coronavirus will not go away anytime soon and that people had learned to deal with it. He also claimed that, despite an increase in the number of people who have been vaccinated, the rate of immunisation has slowed.
Investors anticipate the publication of the Federal Reserve's July meeting minutes on Wednesday, which are expected to provide clues regarding the central bank's withdrawal of economic support.
EUR/USD Intraday Technical Levels
Support Resistance
1.1682 1.1760
1.1656 1.1812
1.1605 1.1838
Pivot Point: 1.1734
EUR/USD - Technical Outlook
The EUR/USD is trading at 1.1714 with a bearish bias. In the 4-hour timeframe, the EUR/USD pair’s immediate support prevails at the 1.1707 level, which marks the double bottom support. A bearish breakout of this support level exposes the direct currency pair towards the next support areas of 1.1680 and 1.1656 levels.
On the flip side, the bearish bias dominates below an intraday pivot point level of 1.1733. A bullish crossover at the 1.1733 level exposes the EUR/USD pair until the 1.1758 level. The Stochastic indicator has started coming out of the overvbought zone. That means, the chances of a selling trend dominating on Wednesday. Investors’ major focus will stay on the FOMC meeting minutes as this could drive price action during the New York session today. All the best!
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