EURUSD: market players await Powell’s speech

The euro landed in the red on Tuesday, September 15. Profit-taking on long positions broke out when euro crosses retraced to highs. By the close, the single currency tumbled 0.14% against the US dollar to 1.1846.

EURUSD rallied to 1.1900 in Asian trading. The uptrend was driven by robust macro data out of China and Europe. Better-than-expected data points on industrial output and retail sales in China in August boosted hopes for an economic recovery. Germany's ZEW investor sentiment index rose in September despite roadblocks from Brexit and rising coronavirus cases.

Todays macro agenda (GMT+3)

12:00 Eurozone: balance of trade (July)

15:30 Canada: CPI (August) and foreign securities purchases (July); US: retail trade (August)

17:00 US: business inventories (July) and NAHB housing market index (September)

17:30 US: EIA weekly petroleum status report

21:00 US: Fed interest rate decision, FOMC post-meeting statement and economic projections

23:00 US: foreign bond investment (July)

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Current outlook

Yesterday's expectations materialized in full. The price rallied to 1.19 as the pair retraced to its intraday high, from which it pulled back to the 45th degree (1.1844) of the Gann angle. The high was fixed at 1.1840.

EURUSD dropped to 1.1829 in Asian trading on the morning of Wednesday, September 16. At the time of writing, the euro was trading at 1.1843. Even though the heightened risk of a no-deal Brexit can be expected to put more pressure on the pound, the euro might also trade lower in sync with cable. This issue will take front and center stage near the end of September, when a new round of talks is scheduled to resume.

Today, all eyes will be riveted on the press conference by Fed chair Jerome Powell. Rates are expected to remain on hold in the 0.00% - 0.25% range and to be left unchanged until the end of 2021. The Fed's soft monetary policy stance will keep the dollar under pressure until it morphs into a safe haven in the event of a stock market crash. We refrain from making a forecast today in view of Powell's upcoming speech. That said, in our view there may well be another downward wave to about 1.1795/1.18.

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