EUR/USD consolidates in a range above 1.1900 mark, FOMC eyed for fresh impetus
- EUR/USD was seen oscillating in a range just above the 1.1900 mark through the Asian session.
- Investors seemed to have moved on the sidelines ahead of the FOMC monetary policy decision.
- The final version of the Eurozone CPI print might produce some short-term trading opportunities.
The EUR/USD pair remained confined in a range above the 1.1900 mark through the Asian session and consolidated the overnight slide to four-day lows.
The pair on Tuesday struggled to capitalize on its intraday uptick, instead met with some fresh supply near mid-1.1900s and drifted into the negative territory for the third consecutive session. The sharp reversal was sponsored by a modest pickup in the US dollar demand, which remained well supported by the upbeat US economic outlook.
Investors remain optimistic about the prospects for a relatively faster US economic recovery and seemed unaffected by Tuesday's disappointing Retail Sales report. In fact, sales at the retail level missed expectations by a big margin and contracted sharply in February, though was offset by an upward revision of the previous month's readings.
Meanwhile, the reflation trade has been fueling speculations for a possible uptick in US inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. This, in turn, pushed the yield on the benchmark 10-year US government bond back closer to over one-year tops and further underpinned the greenback.
On the other hand, the shared currency was weighed down by concerns that the suspension of the COVID-19 vaccine in Europe will hinder economic recovery. Spain, Germany, France and Italy became the latest European countries to temporarily halt the Oxford/AstraZeneca coronavirus vaccine amid reports of possible serious side effects.
The EUR/USD pair tumbled to an intraday low level of 1.1882, albeit lacked any strong follow-through selling and finally settled near the 1.1900 mark. Investors now seemed reluctant to place aggressive bets, rather preferred to wait on the sidelines ahead of Wednesday's key event risk – the outcome of a two-day FOMC monetary policy meeting.
The Fed is scheduled to announce its decision later during the US session on Wednesday and is widely expected to leave monetary policy settings unchanged. Hence, the market focus will be on the central bank's response to the recent upsurge in long-term borrowing costs and updated economic projections, which will help determine the EUR/USD pair's near-term trajectory.
In the meantime, the final version of the Eurozone consumer inflation figures might influence the common currency and produce some short-term trading opportunities around the EUR/USD pair.
Technical levels to watch