During Wednesday’s European session, the EUR/USD pair recovered some of the ground that it had lost. In the wake of Fed Chair Powell’s dovish remarks, the US dollar has begun to weaken again, which provides support for the pair. Gazes shift to Fed Minutes and US ADP statistics.
The EUR/USD pair is trading marginally higher than 1.0750, continuing its upward trend from Tuesday. The technical picture indicates a build-up of bullish momentum, but unless there is a fundamental catalyst driving the move higher, the pair may find it difficult to break above the 1.0790–1.0800 region.
The US Dollar (USD) struggled to find demand on Tuesday as risk flows began to dominate the markets, leading to a spike in the EUR/USD exchange rate in the second half of the day.
@credit image to Forexfactory.com
Speaking at the ECB Forum on Central Banking, Chairman of the Federal Reserve (Fed) Jerome Powell observed that there were indications of a resumption of the disinflation trend, but he emphasised that greater assurance is required before lowering the policy rate. Christine Lagarde, the president of the European Central Bank (ECB), stated that the Eurozone’s inflation rate was rising steadily and that they were “very advanced” on the disinflationary road.
ADP Employment Change and the US ISM Services PMI data will be examined later in the day for potential new catalysts.
It is predicted that the ISM Services PMI would slightly decline from 53.8 in May to 52.5 in June. A score below 50, indicating a slowdown in economic activity in the service sector, would lead to a selloff in the USD and pave the way for another run higher in the EUR/USD. However, a better-than-expected PMI result would support the USD’s strength against its competitors and restrict the pair’s upward movement.