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In addition to giving up previous gains, the EUR/USD pair was trading lower at 1.0805 during Wednesday’s second half of the day. With a -0.18% decline and a current value of 104.263, the DXY Index is in negative territory. DXY is impacted by disappointing US private sector job data, which pushes the pair higher ahead of any policy pronouncements from the Federal Reserve.
Ahead of the Federal Reserve’s (Fed) pronouncement of monetary policy, the US Dollar was lower against most of its main competitors, which caused the EUR/USD pair to grind higher during the European session. Although market investors hope Chair Jerome Powell and lawmakers would clear the path for a September rate decrease, it is widely expected that the US central bank will maintain current rates. Furthermore, speculative interest will look for evidence that the central bank would lower rates in December as they expect doing so.
Eurozone Developments
Meanwhile, the Eurozone published the preliminary estimate of the July Harmonized Index of Consumer Prices (HICP), which rose by 2.6% YoY, surpassing the expected 2.4%. Given that markets have already priced in a rate cut from the European Central Bank (ECB), the news had no negative impact on the Euro.
BoJ
The dollar traded mixed during Asian trading hours. The Bank of Japan (BoJ) decided to raise the interest rate by 15 basis points (bps) from the range of 0%-0.1% to 0.15%-0.25%, confirming a rumour that started mid-Tuesday. The Japanese Yen soared, undermining demand for the USD.
Across the pond, the US published the ADP Employment Change report, which showed that the private sector added 122K new jobs in July, missing expectations and below the revised 155K gained in June.
Technical Factors:
In the near term and according to the 4-hour chart, the upside seems limited. Technical indicators have recovered from their recent lows and aim north but remain within negative levels. At the same time, a flat 200 SMA at around 1.0800 continues to provide intraday resistance. At the same time, EUR/USD is battling to overcome a bearish 20 SMA, still falling short of confirming an upcoming upward extension.
