- Financial markets battle to retain the optimism amid Chinese woes.
- The Federal Open Market Committee (FOMC) will publish the Minutes of its latest meeting.
- EUR/USD continues to consolidate with modest signs of easing buying interest.
The EUR/USD pair seesaws around the 1.0800 level, lacking directional strength on Wednesday as investors keep waiting for fresh clues. Financial markets are slowly digesting that global economic progress remains tepid and that central banks are nowhere near trimming interest rates after pushing them to record highs to control skyrocketing inflation. Indeed, price pressures have receded, and there are modest signs of growth. Still, the general picture is much weaker than speculative interest expected a year ago.
The disappointment was partially offset by mostly encouraging earnings reports in the United States (US), which pushed the S&P500 to all-time highs. But as the season approaches its end, the focus shifts. Bad news from China keeps weighing on the market’s mood. The People’s Bank of China (PBoC) has trimmed mortgage-related rates this week to boost the troubled housing sector, to no avail. However, local stocks rallied early on Wednesday as authorities limited quant funds trading, yet another measure to support the market. Still, other Asian indexes could not follow the lead, while European ones post modest gains. Equities reflect a continuously tepid sentiment.
The macroeconomic calendar features Federal Reserve (Fed) speakers and the Federal Open Market Committee (FOMC) meeting Minutes in the upcoming American session. Market players hope the document could clarify policymakers’ intentions on monetary policy. The central bank anticipated three potential rate cuts throughout 2024 in the dot plot published in December. The Minutes won’t come with a forecast update but could hint at changes in policymakers’ views. Anyway, the document is expected to reaffirm its higher-for-longer stance on interest rates and could have a limited impact on the market, moreover considering employment and inflation data released after the meeting.
The EUR/USD pair trades around the 23.6% Fibonacci retracement of the 1139-1.0694 decline at 1.0799. From a technical point of view, the daily chart suggests buyers are giving up. Technical indicators retreat from their midlines, gaining downward strength within negative levels. At the same time, EUR/USD is stuck around a flat 100 Simple Moving Average (SMA), which converges with the aforementioned Fibonacci level.
The 4-hour chart offers a neutral stance. The Momentum indicator barely stands above its 100 line, suggesting a marginal bullish bias. The Relative Strength Index (RSI) indicator is heading south at 56, limiting the bearish potential while holding within positive levels. Finally, the 200 SMA continues to provide dynamic resistance at around 1.0840, while the 20 SMA stands a handful of pips below the current level, reflecting the tight range and the absence of clear directional interest.
Support levels: 1.0770 1.0720 1.0690
Resistance levels: 1.0840 1.0885 1.0620
