Euro maintains the choppy trade below 1.0700, looks at ECB-speak, FOMC

• The Euro reverses Tuesday’s losses vs. the US Dollar.
• Stocks in Europe kicked off Wednesday’s session with decent gains.
• EUR/USD remains bid below the 1.0700 hurdle.
• The USD Index (DXY) treads water in the low 105.00s so far.
• The Fed is expected to keep rates unchanged at its event.
• Usual weekly MBA Mortgage Applications are due later.
• ECB’s Panetta, Enria, Schnabel, Jochnick, Mc Caul, Elderson are due to speak.

The Euro (EUR) leaves behind Tuesday’s daily pullback against the US Dollar (USD), encouraging EUR/USD to regain some composure and print decent gains near the 1.0700 barrier on Wednesday.

On the other side of the equation, the Greenback trades in an inconclusive fashion in the low 105.00s when tracked by the USD Index (DXY) amidst steady cautiousness ahead of the key FOMC gathering later in the European evening or night.

On the latter event, market participants widely anticipate the Fed holding its interest rates amidst rising speculation of rate cuts at some point in Q2 2024.

In the domestic calendar, New Car Registrations in the European Union expanded 21.0% in the year to August, and Producer Prices in Germany rose 0.3% MoM in August and contracted 12.6% from a year earlier.

In the US, MBA will release its usual weekly Mortgage Applications and the EIA will publish its weekly report on US crude oil supplies.

Daily digest market movers: Euro appears bid prior to Fed

• The EUR gathers renewed buying interest vs. the USD.
• US and German yields trade marginally on the defensive so far.
• Consensus among see the Fed keeping rates unchanged on Wednesday.
• The PBoC kept its 1-Year and 5-Year Loan Prime Rate (LPR) unchanged.
• Markets continue to factor in probable rate cuts by the Fed in H1 2024.
• An impasse in the ECB’s hiking cycle appears to be gathering traction.
• UK inflation came in short of estimates in August.

Technical Analysis: Euro faces a minor up-barrier near 1.0770

EUR/USD resumes the upside amidst the broader weekly choppiness and is expected to challenge the key 1.0700 region sooner rather than later.

In case EUR/USD breaches its September low of 1.0631 (September 14), there is a possibility that it may revisit the March low of 1.0516 (March 15) ahead of the 2023 bottom of 1.0481 (January 6).

On the upside, there is a minor resistance level at the weekly high of 1.0767 (September 12) prior to the more relevant 200-day SMA at 1.0828. If the pair manages to break above this level, it could allow for the continuation of the recovery to the temporary 55-day SMA at 1.0916, ahead of the weekly top of 1.0945 (August 30). The surpass of the latter could put a potential visit to the psychological level of 1.1000 back on the radar seconded by the August peak of 1.1064 (August 10). North from here, the pair could retest the weekly high at 1.1149 (July 27), before the 2023 top at 1.1275 (July 18).

However, it is important to note that as long as the EUR/USD remains below the 200-day SMA, there is a possibility that the pair may continue to experience downward pressure.