EUR/USD Forecast: More room on the downside if 1.1340 resistance holds
EUR/USD has extended its slide early Wednesday and touched its weakest level in nearly 16 months 1.1263 before staging a modest rebound toward 1.1300. The pair stays technically oversold but it's likely to have a difficult time staging a convincing rebound unless the fundamental outlook changes.
The policy divergence between the European Central Bank (ECB) and the US Federal Reserve allows sellers to continue to dominate EUR/USD's action. For the bearish pressure to ease, either FOMC policymakers should push back against 2022 rate hike expectations or ECB officials should start sounding more worried about the inflation outlook.
St. Louis Fed President James Bullard argued on Tuesday that the Fed should turn "more hawkish" in upcoming meetings to smooth out the policy normalization process. On the other hand, ECB Governing Council Member Olli Rehn reiterated that he was expected inflation in the euro area to ease next year. Later in the session, Eurostat is expected to report that the eurozone Consumer Price Index (CPI) stood at 4.1% on a yearly basis in October. Since this data will be a revision, it is unlikely to trigger a noticeable market reaction.
There won't be any high-tier data releases featured in the US economic docket on Wednesday and the US Treasury bond yields could continue to drive the dollar's market valuation. Several FOMC members, including NY Fed President John Williams and San Francisco Fed President Mary Daly, who is a known dove, will be delivering speeches.
EUR/USD has extended its slide early Wednesday and touched its weakest level in nearly 16 months 1.1263 before staging a modest rebound toward 1.1300. The pair stays technically oversold but it's likely to have a difficult time staging a convincing rebound unless the fundamental outlook changes.
The policy divergence between the European Central Bank (ECB) and the US Federal Reserve allows sellers to continue to dominate EUR/USD's action. For the bearish pressure to ease, either FOMC policymakers should push back against 2022 rate hike expectations or ECB officials should start sounding more worried about the inflation outlook.
St. Louis Fed President James Bullard argued on Tuesday that the Fed should turn "more hawkish" in upcoming meetings to smooth out the policy normalization process. On the other hand, ECB Governing Council Member Olli Rehn reiterated that he was expected inflation in the euro area to ease next year. Later in the session, Eurostat is expected to report that the eurozone Consumer Price Index (CPI) stood at 4.1% on a yearly basis in October. Since this data will be a revision, it is unlikely to trigger a noticeable market reaction.
There won't be any high-tier data releases featured in the US economic docket on Wednesday and the US Treasury bond yields could continue to drive the dollar's market valuation. Several FOMC members, including NY Fed President John Williams and San Francisco Fed President Mary Daly, who is a known dove, will be delivering speeches.