- FED Report Uncertainty
- U.S Dollar Weakness
- EUR/GBP Bounce Back
EUR/USD bounced back to three-month highs, on Wednesday morning, after coming under pressure on Tuesday. The bounce-back affirmed the single currency longest rally that has seen it register substantial gains against the dollar.
FED Report Focus
The EUR/USD pair was up by as much as 0.2% early Wednesday, as uncertainty over the Federal Reserve Meeting report rocked the market, sending the dollar lower. The pair continued to flirt with highs of $1.1355, levels last seen before the COVID-19 pandemic took a toll on the Eurozone economy, conversely hurting Euro sentiments.
The pair looks set to remain range-bound at three-month highs awaiting the outcome of the FED policy meeting. The market waits to see what the FED has on its cards to revitalize an economy battered by the COVID-19 pandemic. The threat of a second wave of coronavirus infections is another headwind that continues to take a toll on the economy.
The FED has already reacted with a wave of stimulus plans that have fueled one of the biggest bull runs in the market. However, the stimulus plans have increased the U.S trade deficit, a development that has continued to weigh in on the dollar strength in the market.
Growing concerns that the dollar could slump to levels last seen in March is one of the developments that continue to offer support to the EUR/USD pair at three-month highs. While the dollar has fallen in June in 8 of 10 years by an average of 0.7%, it is already down 2%, ahead of the much-awaited Feds decision.
A resurgent euro against a basket of other major currencies also helped catapult the EUR/GBP pair with a one-week low. The pair continued to rally in Wednesday trading session as the British Pound remained on the defensive amidst BREXIT concerns and economic recovery concerns.
In addition to the FOMC economic projection later in the day, traders also await the core CPI data expected to shed more light on the health of the U.S economy. The outcome of the two reports could way on the dollar strength conversely affect EUR/USD direction of trade.