For the EUR, it is a busy day ahead on the Eurozone economic calendar. Before the European open, German consumer confidence figures will draw interest. Following weak business sentiment numbers for July, today’s numbers could force the ECB to reconsider a 50-basis point hike in September.
Later in the morning, French consumer confidence and Italian consumer and business confidence figures are also due, with forecasts EUR negative.
Following ECB chatter from the weekend, we expect EUR sensitivity to the consumer confidence numbers.
ECB chatter on inflation raised yet more questions on how the ECB will navigate inflationary pressures and a waning economy. ECB policymaker Pablo Hernandez talked about the risks to the Eurozone inflation outlook intensifying,
However, the event of the day is the Fed monetary policy decision, with uncertainty over the Fed’s next move likely to drive market volatility.
On Tuesday, Walmart (WMT) spooked the markets with a grim outlook for Q2 and the full year. Shares tumbled by 7.64% to $121.9 after the company said that higher prices for fuel and food would cause consumers to cut back on spending.
FOMC members may, therefore, need to look beyond the economic indicators.
EUR/USD Price Action
At the time of writing, the EUR was up 0.30% to $1.01454.
A bullish start to the session saw the EUR rise from an early low of $1.01130 to a high of $1.01476.
The EUR/USD needs to move through the $1.0158 pivot to target the First Major Resistance Level (R1) at $1.0208 and the Tuesday high of $1.02501.
Economic indicators will need to beat forecasts to support a return to $1.020.
An extended rally would likely see the EUR/USD pair test the Second Major Resistance Level (R2) at $1.0300 before any pullback.
The Third Major Resistance Level (R3) sits at $1.0443.
Failure to move through the pivot would bring the First Major Support Level (S1) at $1.0065 into play.
An extended sell-off throughout the day could see the EUR/USD test the second Major Support Level (S2) at $1.0015 and support at $1.00.
The Third Major Support Level sits at $0.9872.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.
At the time of writing, the EUR sat below the 50-day EMA, currently at $1.01785.
The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, which were negative price signals.
A breakout from the 50-day EMA would support a run at R1 and the 100-day EMA, currently at $1.02111.
The US Session
It is a big day ahead for the Greenback. Going into the US session, core durable goods orders will draw market interest. With recessionary fears rising, weak numbers will test support for riskier assets and the EUR/USD.
However, the main event of the session will be the Fed monetary policy decision. While the interest rate decision is the key, the Fed’s forward guidance will also need considering. Weak economic indicators may force the Fed to readjust its rate path towards normalization.
Away from the economic calendar, US corporate earnings will also draw interest, though earnings will likely play second fiddle to the Fed.