The euro jumped to 1.2147 on news that the EU and the US agreed to end their multi-year trade dispute over Boeing and Airbus. The EURGBP cross reacted with a move to the upside. The GBPUSD pair fell, dragging other currencies down with it.
By the close, EURUSD pair recovered to 1.2130 and continues to consolidate near that mark. The rebound may have been due to the release of US macro data. Industrial production rose in May, while retail sales fell.
Today’s macro agenda (GMT 3)
- 15:30 Canada: CPI (May) and wholesale trade (April); housing starts and building permits (May), import prices (May)
- 17:30 US: EIA weekly petroleum status report
- 21:00 US: FOMC interest rate decision, post-meeting statement and FOMC dot plot
- 21:30 US: Fed Chair Jerome Powell press conference
At the time of writing, the euro was trading at 1.02129. Price action is consolidating at 1.2121 near the balance line (55-day SMA). Today’s highlights are the FOMC meeting and a press conference by Federal Reserve Chairman Jerome Powell.
The 10-year UST yield stands at 1.494%. Market participants await Powell's speech. The Fed is expected to hold rates steady at 0.0-0.25% until at least 2023, while discussions about dialing back stimulus will begin in early 2022. FX players are looking for Powell to drop some hints about the tapering timeline.
After Friday's pullback the key pair has been trading within the range of 1.2092-1.2147 (55 pips). Price action is expected to remain below 1.2147 until the North American session. If Powell sticks to his narrative from the last meeting, EURUSD pair will continue to recover to 1.2175 (1). Any revision of QE timing would trigger a rally in the dollar and bond yields. In that case, the euro would come under pressure and we could see a break below 1.2090.