EUR/USD weaker, 1.2300 looms closer ahead of FOMC
- Spot remains in the negative territory and threatens 1.2300.
- USD keeps the bid tone and now targets the 90.00 handle.
- Downbeat flash PMIs add to the daily pullback.
The sentiment around the European currency stays depressed so far this week and is now dragging EUR/USD to challenge the critical support at the 1.2300 handle.
EUR/USD focused on FOMC
Spot keeps grinding lower on Wednesday and has opened the door for a potential test of 1.2300 the figure in case the prevailing selling impulse gathers further traction.
Earlier in the session, lower-than-expected advanced PMIs in the core euro area for the month of February has also collaborated with the current leg lower. The results add to yesterday’s mixed readings from the German/EMU ZEW survey, all weighing down on spot.
Further downside pressure comes from the US money markets, where yields of the US 10-year reference are gyrating around 2.90% after bouncing off session lows near 2.88%. Ahead in the session, attention will be on the 5-year note auction after Tuesday’s 2-year note auction rose to the highest level in a decade, albeit amidst decent demand.
Later in the session, investors will closely follow the publication of the FOMC minutes, with the potential rate path by the Fed and the impact of fiscal stimulus on planned rate hikes on top of the agenda.
In addition, Markit’s flash manufacturing PMI, existing home sales and the API’s report on crude oil stockpiles are also due across the Atlantic
EUR/USD levels to watch
At the moment, the pair is losing 0.17% at 1.2316 facing immediate contention at 1.2308 (low Feb.21) followed by 1.2276 (low Feb.14) and finally 1.2206 (low Feb.9). On the upside, a breakout of 1.2557 (2018 high Feb.16) would target 1.2598 (61.8% Fibo of the 2014-2017 drop) en route to 1.2886 (high Oct.15 2014).