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EUR/USD: all about the FOMC now - FXStreet

FXStreet (Guatemala) - Valeria Bednarik, chief analyst at FXStreet explained the dollar edged sharply lower this Wednesday, as poor inflation readings in the US, fueled the idea that the FED won't deliver a rate hike this Thursday.

Key Quotes:

"The common currency began the day with a soft tone, faltering around the 1.1300 level and falling down to 1.1213 during the European session, as the EU annual inflation was 0.1% in August, down from 0.2% in July. The monthly inflation in the same month, was 0.0%. The common currency was also pressured by ECB's Constancio words, as the vice-president of the Central Bank said that they are ready to extend QE if needed. Before Wall Street opening's bell, however, the US released its CPI for August, which decreased 0.1% whilst the annual reading remained unchanged at 0.2%. The CPI ex food and energy yearly basis, resulted at 1.8%, against expectations of 1.9%.

A bout of dollar selling began after the US opening, with the EUR/USD pair advancing up to 1.1313 before retracing some. The pair is still trading lower in the week, struggling around the 1.1300 level by the end of the day.

The 1 hour chart shows that the price is now around its 100 SMA, whilst the technical indicators lost upward potential, and turned lower, approaching now their mid-lines. In the 4 hours chart, a neutral stance prevails, with the price unable to establish above a flat 20 SMA, and the technical indicators stuck around their mid-lines. The upcoming direction depends solely on FED's decision now, with the dollar seen appreciating should the Central Bank pull the trigger."

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