- EUR / USD gained strong intraday traction following the release of upbeat impressions from the Eurozone PMI.
- The prevailing bearish sentiment surrounding the USD continued to support the positive move.
- Disappointing US retail sales did not provide any respite for the USD; the focus remains on the FOMC.
The pair EUR/USD It maintained its offered tone during the early North American session, although it is down about 30 pips from the multi-year highs set earlier this Wednesday.
The pair caught some aggressive offers and eventually broke its two-day consolidated trading range in reaction to the better than expected release of the German / Eurozone PMI figures for December. The strong positive intraday movement was supported by the prevailing bearish sentiment around the US dollar.
Indeed, the USD fell to new two-and-a-half-year lows amid firm expectations for a new COVID-19 relief package and optimism about the launch of vaccines for the highly contagious disease. This, coupled with hopes for a Brexit deal, boosted investor confidence and further undermined the safe-haven dollar.
The USD remained depressed and took no respite from worse-than-expected monthly US retail sales figures. Top sales fell 1.1% in November versus an expected 0.3% drop. Added to this, sales excluding cars also disappointed market expectations and decreased by 0.9% during the reported month.
Meanwhile, the market had a fairly subdued reaction to the disappointing macroeconomic data, as the focus remains on the highly anticipated update of the FOMC’s monetary policy. The Fed is scheduled to announce its policy decision later in the US session and is expected to keep the key interest rate close to zero overnight.
Therefore, the main focus will be on the accompanying monetary policy statement and updated economic projections. Aside from this, comments from Fed Chairman Jerome Powell at the post-meeting press conference will be scrutinized for clues on the central bank’s policy outlook, which, in turn, would influence the USD.
Technical levels
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