EUR/USD erases a part of FOMC-inspired gains, slides to mid-1.1900s

  • EUR/USD stalled the post-FOMC strong positive momentum just ahead of the 1.2000 mark.
  • The upbeat US economic outlook helped revive the USD demand and exerted some pressure.
  • Investors now eye speeches by ECB President Lagarde, US economic data for a fresh impetus.

The EUR/USD pair edged lower during the Asian session on Thursday and was last seen trading near the lower end of its daily range, just above mid-1.1900s. 

The FOMC announced its policy decision on Wednesday and stuck to its ultra-dovish tone, reiterating that it was in no rush to raise interest rates at least through 2023. The announcement triggered a massive US dollar sell-off and assisted the EUR/USD pair to rally nearly 100 pips from the 1.1885 region.

Bulls, however, struggled to capitalize on the momentum and once again failed ahead of the key 1.2000 psychological mark. The Fed added to the narrative of a strong US economic recovery, which helped limit the USD downfall. This, in turn, was seen as a key factor that acted as a headwind for the EUR/USD pair.

Meanwhile, concerns that the suspension of the COVID-19 vaccine in Europe will hinder fragile Eurozone economic recovery further held bulls from placing aggressive bets around the shared currency. That said, any further slide is likely to remain limited ahead of the ECB President Christine Lagarde’s scheduled speech.

Thursday’s US economic docket features the releases of the Philly Fed Manufacturing Index and the usual Initial Weekly Jobless claims. This, along with the US bond yields, might influence the USD price dynamics and provide some impetus. Traders will further take cues from the BoE decision for some cross-driven movement.

From a technical perspective, the emergence of some fresh selling ahead of the 1.2000 mark now seemed to constitute the formation of a bearish double-top chart pattern. This might inspire bearish traders and turn the EUR/USD pair vulnerable to slide back to the 1.1900 mark before eventually dropping to the 200-day SMA.

Technical levels to watch

EUR/USD

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