- EUR/USD went into a consolidation phase below 1.0600 following Tuesday's decline.
- The Fed is widely expected to leave it policy rate unchanged.
- A hawkish tone on policy outlook could help USD continue to gather strength.
EUR/USD reversed its direction and closed in negative territory below 1.0600 on Tuesday after rising to a fresh weekly high above 1.0670. The Federal Reserve's (Fed) policy announcements later in the day could trigger the next big action in the pair.
The US Dollar (USD) gathered strength against its rivals during the American trading hours on Tuesday. The rebound seen in the US Treasury bond yields and month-end flows provided a boost to the currency and forced EUR/USD to turn south.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF |
| USD |
| 0.18% | 0.03% | 0.07% | -0.02% | -0.03% | -0.18% | -0.03% |
| EUR | -0.19% |
| -0.17% | -0.11% | -0.23% | -0.24% | -0.39% | -0.23% |
| GBP | -0.03% | 0.14% |
| 0.04% | -0.08% | -0.09% | -0.23% | -0.08% |
| CAD | -0.07% | 0.12% | -0.03% |
| -0.10% | -0.10% | -0.23% | -0.12% |
| AUD | 0.02% | 0.21% | 0.06% | 0.08% |
| -0.02% | -0.15% | -0.02% |
| JPY | 0.03% | 0.22% | 0.07% | 0.13% | 0.00% |
| -0.17% | 0.04% |
| NZD | 0.15% | 0.35% | 0.20% | 0.25% | 0.14% | 0.13% |
| 0.17% |
| CHF | 0.05% | 0.23% | 0.08% | 0.11% | 0.03% | -0.01% | -0.12% |
|
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The US economic docket will feature ADP Employment Change and ISM Manufacturing PMI data for October. The US Bureau of Labor Statistics will release JOLTS Job Openings for September as well. The reaction to these data releases is likely to remain short-lived.
The Fed is widely anticipated to leave the policy rate unchanged at the 5.25%-5.5% range. Investors will scrutinize the policy statement and comments from Chairman Jerome Powell in search of fresh clues regarding the next policy action. Although the revised Summary of Economic Projections (SEP) in September showed that a majority of policymakers saw it appropriate to raise the policy rate one more time before the end of the year, the CME Group FedWatch Tool points to a 73% probability that the Fed will stand pat on policy in 2023.
In case the Fed leaves the door open for one more rate hike, citing strong economic activity and tight labor market conditions, the USD could continue to outperform its rivals and weigh on EUR/USD. On the other hand, the USD could come under pressure if the Fed notes that softening inflation and the recent rise in yields could allow them to stay on hold this year.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declined below 50 and EUR/USD closed the last three 4-hour candles below the 100 and the 200-period Simple Moving Averages (SMA), reflecting a bearish tilt in the short-term outlook.
On the downside, 1.0530 (static level) aligns as interim support before 1.0500 (psychological level, static level). A 4-hour close below the latter could open the door for an extended slide toward 1.0450 (end-point of the latest downtrend).
In case EUR/USD rises above 1.0570-1.0580 (Fibonacci 23.6% retracement, 100-period SMA, 200-period SMA) and stabilizes there, 1.0640 (Fibonacci 38.2% retracement) and 1.0700 (Fibonacci 50% retracement) could be seen as next resistances.