EUR/USD at session highs near 1.1600 ahead of Fed’s minutes

• The euro extends recovery from 1.15.25 lows to levels near 1.1600.
• The US dollar loses ground with all eyes on the FOMC minutes.
• EUR/USD remains bearish, targeting 1.1000 – Credit Suisse.

The euro has continued regaining lost ground against a somewhat softer dollar on Wednesday with the investors awaiting the release of the minutes of the last FOMC meeting. The pair has bounced up from year-to-date lows at 1.1525 to appreciate about 0.5% returning to levels a few pips shy of 1.1600.

The dollar loses ground ahead of the FOMC minutes

The greenback is extending losses on Wednesday, with the market bracing for the release of the last Fed’s meeting minutes The market looking for clues on the possibility that the Bank will announce the tapering of its QE program in November and possibly suggest the timing of the first interest rate hike.  

Beyond that, the flattening US bond yield curve has added negative pressure on the USD on Wednesday as the benchmark 10-year note has pulled back to 1.57% from levels past 1.6% on Tuesday. On the macroeconomic calendar, US Consumer Prices Index figures have confirmed the inflationary trend observed over the previous months, adding pressure on the US central bank to normalize its monetary policy.

EUR/USD remains bearish, targeting 1.1000 – Credit Suisse

The current euro recovery, however, is seen as a mere correction by Credit Suisse’s  FX Analysis team. In a bigger picture, the pair remains heading lower: “EUR/USD is probing the weekly Ichimoku cloud and is close to the peak of March 2020 at 1.1495. Defending this can result in a rebound, however, 1.1665 could cap (…) Below 1.1495, next support could be at 1.1450 and projections of 1.1380 (…) “Whilst we would expect a fresh hold at 1.1290, we continue to see the broader risks skewed to the downside, with support seen next at 1.1020/00.”

Technical levels to watch