EUR/USD extends the recovery to 1.1650, FOMC eyed

After testing lows in the vicinity of 1.1610, EUR/USD has regained some attention and is now heading once again towards the mid-1.1600s.

EUR/USD focus on FOMC

Spot trimmed initial losses and is now looking to prolong the rebound into the negative territory near 1.1650 amidst some selling mood around the greenback.

In fact, tracked by the US Dollar Index (DXY), the buck clinched weekly tops above 94.00 the figure earlier in the session, although sellers stepped in and are now driving the index to the 93.90 area.

Looking ahead, the FOMC meeting will be the main event this week, with consensus expecting the Fed to stay on hold, although there is room for some change in the wording around inflation.

In the meantime, US-GE yield spread differentials continue to drive the sentiment around spot, all against the backdrop of rising skepticism around a third rate hike by the Fed while ECB ‘taper’ remains on the pipeline.

EUR/USD levels to watch

At the moment, the pair is down 0.02% at 1.1644 and a breakdown of 1.1565 (10-day sma) would open the door to 1.1479 (21-day sma) and finally 1.1477 (low Jul.20). On the upside, the initial hurdle is located at 1.1712 (2017 high Jul.25) seconded by 1.1713 (monthly high Aug.24) and then 1.1800 (psychological level).