EUR/USD: Bulls remain in control around 1.0150 ahead of the FOMC event

• EUR/USD sticks to the positive territory well north of 1.0100.
• German GfK Consumer Confidence tumbled to record lows.
• Investors’ attention stays on the Fed and Powell’s press conference.

The single currency maintains the bid bias unchanged and prompts EUR/USD to navigate in the 1.0150 zone ahead of the FOMC gathering due later in the NA session.

EUR/USD now looks to the Fed

EUR/USD met some decent support near the 1.0100 region on Tuesday, sparking a subsequent bounce to the 1.0170/75 band on Wednesday ahead of the key FOMC gathering.

On this, all the bets keep leaning towards a 75 bps hike, although market participants are expected to scrutinize Powell’s press conference, where the battle around inflation and the next steps regarding the fed’s normalization process are predicted to be in the centre of the discussion.

Earlier in the euro calendar, Germany’s Consumer Confidence dropped to record low in August (-30.6), as concerns around the energy crunch remain on the rise. Similar path followed the readings in France and Italy for the current month.

Results across the ocean saw MBA Mortgage Applications contract 1.8% in the week to July 22, Durable Goods Orders expand 1.9% MoM in June and the trade deficit shrink to $98.18B also in June. Later in the session, Pending Home Sales and the EIA report on US crude oil supplies will close the calendar.

What to look for around EUR

EUR/USD regains the smile somewhat following Tuesday’s deep drop to the boundaries of the 1.0100 region.

The pair extends its range bound stance, as market participants continue to gauge the latest ECB announcements and appear cautious ahead of the upcoming FOMC event later on Wednesday.

In the meantime, the price action around the European currency closely follows increasing speculation of a probable recession in the euro area, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

Key events in the euro area this week: Germany GfK Consumer Confidence (Wednesday) – EMU Final Consumer Confidence, Economic Sentiment, Germany Flash Inflation Rate (Thursday) – Germany Unemployment Change, Unemployment Rate, Flash Q2 GDP, EMU Flash Inflation Rate, Advanced Q2 GDP (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Performance of the economic recovery post-pandemic in the region. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is gaining 0.31% at 1.0146 and a breakout of 1.0278 (weekly high July 21) would target 1.0438 (55-day SMA) en route to 1.0615 (weekly high June 27). On the other hand, initial contention emerges at 1.0107 (weekly low July 26) seconded by 1.0000 (psychological level) and finally 0.9952 (2022 low July 14).