- EUR / USD was seen oscillating in a range just above the 1.1900 mark during the Asian session.
- Investors seemed to have moved on the elbow ahead of the FOMC monetary policy decision.
- The final version of Eurozone CPI printing may offer some short-term trading opportunities.
The EUR / USD pair remained limited in range above the 1.1900 mark during the Asian session and confirmed the overnight slide to a four-day low.
The pair on Tuesday struggled to capitalize on their intraday uptick, instead they met new supply near the mid-1.1900s and moved into the negative territory for the third consecutive session. The sharp turnaround was supported by a moderate uptrend in U.S. dollar demand, which was still well supported by the positive U.S. economic outlook.
Investors remain optimistic about the prospects for a relatively accelerated U.S. economic recovery and did not appear to be affected by Tuesday’s sell-off disappointment report. Indeed, sales at the sell – off point were expected to fall by a large margin and contract sharply in February, although offset by an upward revision of the previous month ‘s readings.
At the same time, trade reflation has fueled profitability for a possible rise in U.S. inflation and raised doubts that the Fed would maintain ultra-low interest rates for longer . This, in turn, pushed yields on the U.S. 10-year benchmark benchmark back closer to more than one-year highs and further supported the greenback.
The currency, on the other hand, has been weighed down by concerns that a ban on the COVID-19 vaccine in Europe will hamper economic recovery. Spain, Germany, France and Italy have become the newest European countries to temporarily suspend the Oxford / AstraZeneca coronavirus vaccine amid reports of possible side effects.
The EUR / USD pair fell to an all-time low of 1.1882, although there was no sustained strong selling and eventually settled near the 1.1900 mark. Investors now seemed willing to place an aggressive bet, but preferred to wait at the elbow ahead of Wednesday’s main event risk – the outcome of a two-day FOMC monetary policy meeting.
The Fed expects to announce its decision later in Wednesday’s U.S. session and is widely expected to leave monetary policy positions unchanged. Thus, the market will focus on the central bank’s response to the recent rise in long-term loan costs and updated economic forecasts, which will help confirm the near-term path of the EUR / USD pair.
In the meantime, the final version of Eurozone consumer inflation figures may affect the common currency and bring out some short-term trading opportunities around the EUR / USD pair .