EUR/USD Drops To Six-Week Low Sub-1.0600 After FOMC Minutes

The EUR/USD pair edged lower and posted a fresh monthly low under 1.0600 on Wednesday amid a stronger U.S. dollar favored by the risk-off environment. However, the corrective decline in U.S. yields across the curve limited the greenback advance and kept the EUR/USD within a narrow range.

At the time of writing, the EUR/USD pair is trading at the 1.0605 area, down 0.36% on the day, having struck its lowest level since January 6 at 1.0598.

The dollar remained firm after the release of the latest Federal Open Market Committee (FOMC) meeting minutes, which showed some members raised concerns about an economic recession in 2023. Still, members voted unanimously to raise the target range for federal funds by 25 bps despite the fact that some members advocated in favor of a 50 bps increase. 

Meanwhile, across the pond, European Central Bank (ECB) member François Villeroy de Galhau noted that the bank is not obliged to raise rates in every meeting, stressing that the monetary policy is already in the restrictive territory with a 2.5% rate.

The final reading of the German Harmonized Index of Consumer Prices confirmed the annual inflation rate at 9.2%. The Eurozone will publish the figures for the bloc on Thursday, which are expected to show consumer inflation hitting 8.6% in January. The U.S. will release the Q4 Gross Domestic Product (GDP) second estimate.
 
 

From a technical perspective, the EUR/USD retains a short-term bearish bias according to indicators on the daily chart, while the price is printing the third red candle in a row. Still, the RSI has not reached oversold territory yet, leaving room for a steeper decline.

The 1.0580 area stands as the immediate support level, followed by 2023 low at 1.0481 and then the 100-day simple moving average (SMA) at 1.0440. On the flip side, short-term resistances are seen at this week’s high at around 1.0700 and the 20-day SMA at 1.0745 ahead of the February 14 peak of 1.0804.