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03.11.2021 12:39

EUR/USD struggles to regain 1.1600, ECB’s Lagarde, Fed in focus

  • EUR/USD holds lower ground, retreats from intraday high of late.
  • Downbeat PMIs weighed on Euro the previous day, USD consolidates gains on Wednesday.
  • Fed has comparatively fewer reasons than ECB to defend bond buying.
  • US ADP Employment Change, ISM Services PMI and Factory Orders are important too.

EUR/USD remains indecisive around 1.1580 heading into the European session on the key Wednesday. The currency major pair dropped the previous day amid downbeat European fundamentals, as well as the market’s rush for USD. However, anxiety ahead of the US Federal Reserve (Fed) decision and a speech from the European Central Bank (ECB) President Christine Lagarde challenge the pair’s latest moves.

Downbeat prints of October’s final Manufacturing PMIs for Germany, France and the Eurozone as a whole dragged the regional currency the previous day. Also weighing on the Euro were receding chatters over the ECB’s tighter monetary policy.

It should be noted, however, that the inflation pressure remains present in the bloc and hence ECB’s Lagarde has fewer options than to accept the wait-and-see situation, which in turn allows EUR/USD moves to take clues from the Fed’s verdict.

Before that, US ADP Employment Change, ISM Services PMI and Factory Orders can offer a gist of how far the Fed needs to go for controlling the escalating price pressure while also keeping the economy fluid. Also likely to challenge the $15.00 billion Fed tapering forecast are the fears of a third wave covid wave.

Against this backdrop, the stock futures remain mildly offered while the bonds remain inactive amid off in Japan. The US Dollar Index (DXY) flirts with the 94.00 round-figure with mild losses by the press time.

It’s worth mentioning that a rebound in the US inflation expectations and bearish bias of the options traders are catalysts that keep EUR/USD bears hopeful ahead of the key Fed decision.

Read: Fed Interest Rate Decision Preview: Inflation, employment and interest rates

Technical analysis

With a sustained pullback from 50-DMA, around 1.1690 at the latest, EUR/USD sellers are up for challenging the yearly bottom surrounding 1.1525. However, the 1.1550 round figure may offer an intermediate halt during the fall. Its worth noting August month’s low near 1.1665 adds to the upside filters.

 


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