U.S. Fundamentals to Play!
The EUR/USD closed at 1.2172 after placing a high of 1.2246 and a low of 1.2160. After rising for four consecutive sessions, the EUR/USD pair dropped on Wednesday and reversed its course amid a come-back in the U.S. dollar. On Wednesday, the currency pair EUR/USD rose in early trading hours and peaked since January 2021. However, it failed to remain there for long and started declining in the second half of the day amid increased strength of the greenback driven by the latest minutes from the Fed.
On Wednesday, the FOMC released the minutes from April’s long-awaited meeting and revealed that many fed officials were suggesting that if the economy continued growing at a fast pace and reach goals set by the committee, the Fed might soon start tapering its asset purchases. This was the first time that a discussion about tapering bond purchases has been done in the meeting. Fed’s current bond purchases lie at $120 billion per month. It might come to an end or be reduced in the coming months if the economy keeps moving towards reaching the goals set by Federal Reserve, particularly about full employment and high inflation.
After the minutes, the U.S. Dollar Index (DXY) reached 90.29 level, that was t 89.69 level on Tuesday, and the U.S. Treasury yields also rose and reached 1.692%. The rising strength in the U.S. dollar added weight on the EUR/USD pair and reversed its course to a bearish trend.
At 14:00 GMT, the Final CPI for the year remained flat as expected, 1.6% on the data front. The Final Core CPI for the year from the whole Bloc dropped to 0.7% against the expected 0.8% and weighed on single currency Euro and added further losses in EUR/USD pair on Wednesday.
Meanwhile, on Tuesday, the European Union launched bonds that could complete the bulk of funding for its SURE unemployment scheme. The EU started the sale of new 8 and 25 year social bonds on Tuesday. The Bloc has plans to raise 13-15 billion Euros out of 19 billion Euros remaining for the SURE unemployment scheme during the second quarter. Eurozone bond markets were calm with Germany’s 10-year bond yield, the benchmark for the region.
EURUSD Intraday Technical Levels
Support Resistance
1.2138 1.2224
1.2106 1.2278
1.2052 1.2310
Pivot Point: 1.2192
EUR/USD - Technical Outlook
The EUR/USD traded sharply bearish to trade at 1.2167 level but soon recovered. On the 4-hour timeframe, the EUR/USD pair is forming a bullish engulfing pattern that supports bullish bias among investors. The EUR/USD’s immediate support stays at the 1.2167 level, and the breakout of this exposes the pair towards the 1.2144 level. At the same time, the resistance stays at 1.2190 and 1.2235 levels. The RSI is heading north, and soon it’s likely to crossover 50 to support a bullish trend, but in case of failure to do so, the EUR/USD’s selling trend will dominate. Later today, investor’s focus will stay on the U.S. Jobless Claims data along with Philly Fed Manufacturing Index. All the best!
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