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EUR/USD Bounced From A Fresh 2021 Low, Bulls Remain Sidelined

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EUR/USD Current Price: 1.1712

  • FOMC Minutes showed policymakers are escalating tapering discussions.

  • EU annual inflation was confirmed at 2.2% in July, as previously estimated.

  • EUR/USD bounced from a fresh 2021 low, bulls remain sidelined.

The EUR/USD pair fell to a fresh 2021 low of 1.1693 on Wednesday, as the dollar kept strengthening amid cautious investors and despite receding demand for safe-haven assets. Government bonds fell, pushing yields to the upper end of their weekly range.

Finally, in the mid-US afternoon, the FOMC released the Minutes of its latest meeting. The document showed that some participants suggested that it would be prudent for the committee to prepare for starting to reduce its pace of asset purchases relatively soon. The pair jumped to 1.1742, its highest for the day, although it gave background to settle around 1.1710.

Earlier in the day, the EU confirmed July annual inflation at 2.2%, as previously estimated. As for the US, the country published July Building Permits and Housing Starts, which printed at 2.6% and -7%, respectively. On Thursday, the EU will publish June Current Account, while the US will release weekly unemployment claims.

EUR/USD short-term technical outlook

The EUR/USD pair heads into the Asian opening trading above the 1.1700 level, but the risk is skewed to the downside. In the 4-hour chart, the pair has extended its decline below all of its moving averages, with the 20 SMA gaining bearish strength below the longer ones. In the meantime, technical indicators have bounced modestly from near oversold readings, holding well into negative territory.

Support levels: 1.1700 1.1660 1.1620

Resistance levels: 1.1750 1.1790 1.1830

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