- EUR/USD is under pressure and breaks below 1.0700.
- C. Lagarde, President of the ECB, will speak later at the WEF in Davos.
- FOMC minutes will be the highlight later in the American session
The vendors seem to come back and force the EUR/USD to break below key support at the 1.0700 level on Wednesday.
EUR/USD focuses on Lagarde and the FOMC
After two consecutive daily advances, EUR/USD is now facing a downside correction and pulls back below 1.0700 amid the resurgence of purchases around the US dollar.
In the meantime, yields on both sides of the Atlantic remain in the consolidation phaseas the recent surge in appetite for riskier assets appears to take a breather on Wednesday.
Early in the session, the data has shown that German GDP growth rate grew by 3.8% year-on-year in the first quarter and consumer confidence, according to GfK, improved slightly to -26 In the month of June. In France, consumer confidence fell short of expectations in May, standing at 86 (vs 87 in April).
Weekly mortgage applications will be published in the American session, as well as orders for durable goods. Later, the release of the FOMC minutes will close today’s economic calendar.
What to watch out for around the euro
The strong rebound in EUR/USD broke above the 1.0700 level on the back of a strong resurgence in risk appetite.
Despite the pair’s current bullish momentum, the general outlook for the common currency remains negative for the time being. As usual, the price action of the pair should reflect the dynamics of the dollar, geopolitical concerns and the divergence between the monetary policy of the Fed and the ECB.
Nevertheless, occasional pockets of common currency strength should be bolstered by speculation that the ECB could raise rates sometime in the summerwhile rising German yields, high inflation and a decent pace of economic recovery in the region also support improving sentiment around the euro.
EUR/USD levels
At time of writing, the EUR/USD pair is down 0.72% on the day, trading at 1.0675. Next resistance is at 1.0748 (24th May high), would target 1.0348 (13th May low) on the way to 1.0340 (3rd Jan 2017 low). On the other hand, a break of 1.0459 (18 May low), 1.0348 (13 May low), would target 1.0340 (3 Jan 2017 low) on the way to 1.0300 (round level).
Source: Fx Street
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