EUR/USD directionless near 1.16 as volatility remains low
- EUR/USD confined in 30-pip range amid a lack of catalysts.
- DXY stays flat on the day near the 94.80 handle.
- European Commission's economic growth forecast awaited.
The EUR/USD pair is moving sideways near the 1.16 handle on Wednesday as investors can't find any fundamental drivers that could impact the price action. At the moment, the pair is trading at 1.1590, virtually unchanged on the day.
Tax bill and EC's report are next potential catalysts
Earlier in the session, the US Treasury Secretary Steven Mnuchin noted that they were aiming to get the final version of the tax bill delivered to President Trump in December. Commenting on the recent USD strength, Mnuchin said that there were some concerns over the short-term impacts of the FX rate on trade. In the meantime, citing a congressional resource, Reuters claimed that the new version of the tax bill would be released tomorrow. Nonetheless, the greenback's reaction to these developments was non-existent with the US Dollar Index staying calm near its opening level of 94.80.
- US Tsy Sec. Mnuchin: Part of USD strength reflects US economy
- US Tsy Sec. Mnuchin: Aim is to get tax bill to Pres. Trump in December
On Thursday, the ECB is going to publish its monthly Economic Bulletin ahead of the European Commission's updated Economic Growth Forecasts. According to the German Economic Advisers Annual Report, a report published by the German government, the ECB needs to publish a strategy for monetary normalization to reduce the risk of volatility in financial markets. Although tomorrow's releases are not likely to touch on the monetary policy outlook, a softer inflation expectation could put the shared currency under pressure.
- German Eco Advisers: ECB should significantly tighten monpol to adapt it to eco developments
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, writes, "the pair holds near the 4-month low set this week at 1.1553, with the risk lean toward the downside, as in the 4 hours chart, the early attempt to recover ground remained capped by a strongly bearish 20 SMA, while technical indicators remain directionless below their mid-lines."
"The mentioned daily low is a key support, as below it, the decline can extend first towards 1.1510, and later towards the major long-term support at 1.1460. An advance above 1.1620/30 on the other hand, could see the pair correcting up to the 1.1670 price zone, where selling interest will probably reject the advance," Bednarik further adds.
- EUR/USD: seasonal trends favoring the greenback? - Scotiabank