- EUR/USD halted the initial rally prior to the 1.1400 area.
- US retail sales beat estimates in January.
- The markets’ attention now shifts to the FOMC Minutes.
After an initial rally to the 1.1400 area, the EUR/USD now retracing part of that move and back towards the 1.1360 area so far on Wednesday.
EUR/USD capped at 1.1400, watch FOMC
EUR/USD failed to extend the weekly bounce above 1.1400 midweek as better-than-expected results from the US docket sponsored a notable rebound in the dollar.
Indeed, US retail sales beat initial estimates after expanding by 3.8% month-on-month in January. Core sales followed suit and rose 3.3% mom. Previous data showed mortgage applications contracted 5.4% in the week to February 11, according to MBA.
Meanwhile, the relief rally continues to maintain the best mood in the risk complex even though there seems to be no further progress in the (apparent) de-escalation of tensions on the Russia-Ukraine front.
Later in the session, US industrial production, capacity utilization, business inventories and the NAHB index are due before the release of the FOMC minutes from the January event.
What to look for around EUR
EUR/USD now appears to have found some decent resistance around the 1.1400 area amid some loss of momentum from the relief rally combined with better-than-expected results on the US economic docket. Looking at the scenario Broader, the improvement in the pair’s outlook appears to be supported by renewed speculation of a possible interest rate hike by the ECB sometime by the end of the year, rising German yields, persistently high inflation and a slower pace. decent growth in economic activity and other key fundamentals in the region.
Technical levels
So far the pair is up 0.02% at 1.1360 and faces the next upside barrier at 1.1395 (16 Feb weekly high), followed by 1.1491 (200-week SMA) and finally 1.1494 (10 Feb high). of 2022). On the other hand, a drop below 1.1326 (55-day SMA) would target 1.1279 (weekly low Feb 14) on the way to 1.1186 (monthly low Nov 24, 2021).
Source: Fx Street
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