The lower than expected US inflation caused a drop of the US Dollar. The EUR/USD surged to the resistance of the weekly R2 at 1.0675, Afterwards, the pair traced and found support near 1.0620. At mid-day on Wednesday, the rate had returned to the 1.0675 level.
Economic Calendar Analysis
On Wednesday, the top event of them all will take place. At 19:00 GMT, the US Federal Reserve will release its Federal Open Market Committee Statement and Economic Projections. The central bank is expected to hike its base interest rate from 4.00% up to 4.50%.
On Thursday, at 13:15 GMT, the European Central Bank will publish its Monetary Policy Statement and with it the Main Refinancing rate. It is expected that the ECB could follow the example of the Federal Reserve. Note that most volatility occurs during the follow up press conference. The press conference is scheduled for 13:45 GMT.
Later on, at 13:30 GMT, the US Retails Sales data and Empire State Manufacturing Index might cause an adjustment in the value of the US Dollar.
The week will end with the publication of Markit Services and Manufacturing sector Purchasing Managers Index survey data. Note that most impact occurs due to the French and German data at 08:15 and 08:30 GMT. The European data is followed by US data at 14:45 GMT.
EUR/USD hourly chart
In regards to near future, fundamentals continue to dictate the moves. At 19:00 GMT, the US Federal Reserve is set to announce its interest rate hike. The markets expect a 0.50% interest increase. Afterwards, at 19:30 GMT, the head of the Federal Reserve Jerome Powell will host a press conference, during which the future plans of the US Dollar's policymakers will be revealed.Hourly Chart
EUR/USD daily chart's review
On the daily candle chart, the 1.0600 had acted as resistance since December 5. During the CPI release on 14.12.2022, the level was broken.Next target for the pair could be the 1.0790/1.0810 zone.
Daily chart
Read More: Technical Analysis
Traders remain short
Before the US CPI, on the Swiss Foreign Exchange, trader open positions were short, as 59% of open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range around the pair were 55% to sell the Euro against the USD.
Before the Fed release, the sentiment was still 59% short and pending orders were 55% to sell.