EUR/USD Struggles Around Parity As Investors Brace For The Fed
The EUR/USD pair advanced slightly on Monday but remained trading within a narrow range as investors take the backseat ahead of the Federal Reserve monetary policy decision on Wednesday.
At the time of writing, the EUR/USD pair is trading at the 1.0025 zone, recording a 0.14% daily gain, the fourth in a row.
The FOMC interest decision, the dot plot Chair Powell’s press conference on Wednesday, will be the week’s highlights. Amid a scarce macroeconomic calendar and growing Fed’s tightening expectations – reflected by rising U.S. bond yields – the U.S. dollar will likely remain firm. Markets have already priced in a 75 bps hike, but the case of a 100 bps increase has risen to 25% odds.
The DXY index trades little changed at the 109.60 area after hitting highs in the 110.15 zone supported by the 2 and 5-year U.S. bond yields reaching fresh highs of 3.970% and 3.714%, respectively.
Across the ponds, ECB officials’ hawkish tone has been keeping the euro afloat. Over the weekend, Joachim Nagel said that “if the data trend continues, more interest-rate increases have to follow, that’s already agreed in the Governing Council.” Meanwhile, Luis de Guindos restated the need for the bank to preserve its credibility. For the ECB’s October 27 meeting, the WIRP tool suggests 85% odds of another 75 bps rate hike.
From a technical perspective, the EUR/USD pair maintains a short-term bearish bias, although indicators are beginning to gather upward momentum according to the daily chart.
On the downside, the immediate support level could be found at the 20-day SMA around 0.9990, followed by the 0.9900 zone and the cycle low of 0.9864. On the upside, short-term resistance levels are seen at the 1.0100 level and the 1.0160 zone.
At the time of writing, the EUR/USD pair is trading at the 1.0025 zone, recording a 0.14% daily gain, the fourth in a row.
The FOMC interest decision, the dot plot Chair Powell’s press conference on Wednesday, will be the week’s highlights. Amid a scarce macroeconomic calendar and growing Fed’s tightening expectations – reflected by rising U.S. bond yields – the U.S. dollar will likely remain firm. Markets have already priced in a 75 bps hike, but the case of a 100 bps increase has risen to 25% odds.
The DXY index trades little changed at the 109.60 area after hitting highs in the 110.15 zone supported by the 2 and 5-year U.S. bond yields reaching fresh highs of 3.970% and 3.714%, respectively.
Across the ponds, ECB officials’ hawkish tone has been keeping the euro afloat. Over the weekend, Joachim Nagel said that “if the data trend continues, more interest-rate increases have to follow, that’s already agreed in the Governing Council.” Meanwhile, Luis de Guindos restated the need for the bank to preserve its credibility. For the ECB’s October 27 meeting, the WIRP tool suggests 85% odds of another 75 bps rate hike.
From a technical perspective, the EUR/USD pair maintains a short-term bearish bias, although indicators are beginning to gather upward momentum according to the daily chart.
On the downside, the immediate support level could be found at the 20-day SMA around 0.9990, followed by the 0.9900 zone and the cycle low of 0.9864. On the upside, short-term resistance levels are seen at the 1.0100 level and the 1.0160 zone.