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EUR/USD moves higher and tests 1.1570 on dovish FOMC

  • The pair prints fresh 2019 highs around 1.1570 on weaker Dollar.
  • The greenback comes all the way down to lows near the 95.00 handle.
  • The ECB will publish its minutes for the December meeting.

The dovish tone from the FOMC minutes on Wednesday hurt the greenback and sent EUR/USD to fresh YTD peaks around 1.1570.

EUR/USD bid on FOMC, looks to ECB

The pair is up for the second session in a row today, boosted by yesterday’s dovish message from the FOMC minutes while also supported by the broad-based positive sentiment in the risk-associated sphere.

In fact, the FOMC minutes showed members now appear more flexible on the likeliness of further tightening via rate hikes as long as domestic inflation remains under control.

In the meantime, the probability of higher rate hikes by the Fed in H1 2019 remains around the 10-12% according to CME Group’s FedWatch tool based on Fed Fund futures prices.

Later in the day, the ECB will publish its minutes from the December meeting, in what will be the only release of note in Euroland. Across the pond, a slew of Fed speakers will include Powell, Clarida, Bullard, Barkin, Evans and Kashkari. In the calendar, Initial Claims is only due.

What to look for around EUR/USD

In the very near term, today’s ECB minutes should bring in more details on the Council’s view on the risks facing the bank’s forecasts as well as the potential direction of the forward guidance in the next months. On the broader scenario, political effervescence in Italy, upcoming discussion over the French budget along with ongoing social unrest and the probability that German economy could enter a technical recession in Q4 are among the main headwinds facing the single currency in the next months.

EUR/USD levels to watch

At the moment, the pair is gaining 0.15% at 1.1558 facing the next hurdle at 1.1570 (2019 high Jan.10) seconded by 1.1621 (high Oct.16 2018) and finally 1.1733 (high Aug.28 2018). On the flip side, a breakdown of 1.1478 (100-day SMA) would target 1.1402 (21-day SMA) en route to 1.1306 (2019 low Jan.3).


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