The Euro (EUR) manages to recover some ground against the US Dollar (USD) and prompts EUR/USD to regain the 1.1080 region after bottoming out at Tuesday's two-week lows around 1.1020. The pair gains momentum and leaves behind the recent bearish trend over several sessions, targeting the key 1.1100 barriers in the very near term against the backdrop of the Greenback's renewed selling pressure and mixed performance of yields on both sides of the Atlantic. The most significant event of the session is the widely anticipated interest rate hike of 25 bps by the Federal Reserve. However, the subsequent press conference by Chief Jerome Powell became increasingly important amidst growing speculation that the Fed might end its tightening campaign sooner than expected. This speculation appears underpinned by the ongoing disinflationary pressures in the US and some signs of cooling in the labor market.
Meanwhile, investors are closely watching the European Central Bank (ECB), with expectations of another quarter-point rate hike on Thursday. The interest in the potential next steps of the central bank regarding monetary policy has been on the rise in the past weeks. Regarding the monetary policy approach, the Fed seems to be approaching the end of its rate-hiking cycle, suggesting a possible pause or slowdown. On the other hand, some ECB officials recently expressed less hawkish views on the likelihood of further rate hikes beyond the summer. In the domestic docket, Consumer Confidence in France remained steady at 85 for the current month. Across the Atlantic, aside from the FOMC event, investors also keep an eye on MBA Mortgage Applications and New Home Sales. EUR/USD regains the smile and looks to retest the 1.1100 neighborhood so far on Wednesday.
Further downside, EUR/USD should meet immediate contention at the weekly low of 1.1020 (July 25) ahead of the psychological 1.1000 mark, all seconded by provisional support at the 55-day and 100-day SMAs at 0901 and 0895, respectively. The loss of this region could open the door to a potential visit to the July 6 low of 1.0833 ahead of the key 200-day SMA at 0706 and the May 31 low of 1.0635. South from here emerges the March 15 low of 1.0516 before 2023 low of 1.0481 on January 6. On the upside, the next hurdle appears at the 2023 high at 1.1275 reached on July 18. Once this level is cleared, there are no resistance levels of significance until the 2022 peak of 1.1495 recorded on February 10. The constructive view of EUR/USD appears unchanged as long as the pair trades above the key 200-day SMA.