EUR/USD fails once again near 1.1660, eyes on US data, Fed

• Resurgent USD demand in Europe.
• Back below mid-1.16s.
• US data, Fed decision – key.

The EUR/USD pair is seen fading a spike to near 1.1660 levels and drops back towards the familiar range near 1.1640 region, in response to positive European equities and renewed broad-based USD buying

EUR/USD: 1.1550 or 1.1750 on Fed?

The spot failed to sustain the bid tone and returned to the red zone, as the bears continue to guard the stiff resistances located near 1.1660 region for the fourth straight session. However, the downside remains capped by 1.1625, which coincides with Tuesday’s low.

The range-play witnessed in EUR/USD can be explained as a typical pre-Fed caution trading, as markets refrain from placing any directional bets on the spot, in anticipation of the FOMC policy outcome, which in most cases triggers massive volatility across the financial markets.

Today, the FOMC Committee is widely expected to keep the rates on-hold, although the Fed’s language in the statement, especially on the inflation outlook, will hold the key for the next direction on the US dollar against its main competitors.

Looking ahead, the major will continue to derive from cross-driven strength, with EUR/JPY making news tops on the back of the USD/JPY rally and risk-on market profile. Also, of relevance for the pair remains the US ADP employment and ISM manufacturing reports, which will be published ahead of the FOMC verdict.

EUR/USD Technical Levels

According to Karen Jones, Analyst at Commerzbank, “EUR/USD’s outlook stays negative, the market last week closed below 1.1662 the 17th August low and in doing so completed a head and shoulders top pattern 1.2092-1.1662, and targeting 1.1232. Given the close proximity of the 200 day ma at 1.1258 we will make this our downside target. The outlook remains negative while capped by the current October highs and early August high at 1.1858/1.1910, intraday rallies are indicated to terminate circa 1.1680/1.1715. Additional support is offered by the mid-June high at 1.1296 and the more important 1.1110 end of May low.”