The single currency exchanges gains with losses vs. the greenback and prompts EUR/USD to navigate a tight range in the 1.1580 zone on Wednesday. EUR/USD manages to somewhat reverse Tuesday’s pullback and trades in a cautious note in line with the rest of the global markets, all ahead of the imminent FOMC meeting later on Wednesday. It is worth recalling that markets’ consensus sees the Federal Reserve announcing the start of the QE tapering process this month, with bets falling on a potential $15B per month and to finish at some point in mid-2022. Investors, however, remain divided on whether it will be a dovish or a hawkish taper. In the euro docket, the jobless rate in the broader Euroland went down to 7.4% in September, matching the previous forecasts.
EUR/USD’s upside remains so far capped by the inability of the pair to break above 1.1600 on a convincing fashion. In the meantime, spot continues to look to the risk appetite trends for direction as well as dollar dynamics, while the loss of momentum in the economic recovery in the region - as per some weakness observed in key fundamentals - is also seen pouring cold water over investors’ optimism and tempering bullish attempts in the European currency. Further out, the single currency should remain under scrutiny amidst the implicit debate between investors’ expectations of a probable lift-off sooner than anticipated and the ECB’s so far steady hand, all amidst the persevering elevated inflation in the region and prospects that it could extend further than previously estimated. So far, spot is gaining 0.01% at 1.1580 and faces the next up barrier at 1.1689 (55-day SMA) followed by 1.1692 (monthly high Oct.28) and finally 1.1755 (weekly high Sep.22). On the other hand, a break below 1.1535 (weekly low Oct.29) would target 1.1524 (2021 low Oct.12) en route to 1.1495 (monthly low Mar.9 2020).
