The EUR/USD pair advanced slightly on Wednesday, recovering the 1.0900 level as markets continue to oscillate ahead of crucial economic data and the Federal Reserve’s decision next week. The euro found some support in German IFO data, which indicated a slight improvement in business sentiment in January.
At the time of writing, the EUR/USD pair is trading at the 1.0910 area, 0.27% above its opening price, pretty close to its nine-month high of 1.0926 struck earlier this week.
On the data front, the German IFO business climate index came in at 90.2 in January versus 88.6 in December, matching the market consensus. The expectations index rose to 86.4, above the 85 expected, while the current evaluation figure came in at 94.1 versus 95 expected.
Market participants are taking a more cautious approach as they await U.S. fourth-quarter Gross Domestic Product numbers on Thursday and the Personal Consumption Expenditures (PCE) Price Index. In addition, ahead of Fed’s verdict next week, markets continue to price in lower rate hikes, with a 25 bps move widely expected.
Wall Street indexes are trading in the red, while U.S. Treasury yields continued to decline on Wednesday, reflecting the cautious mood. Still, the greenback has been unable to profit from it.
From a technical standpoint, the EUR/USD pair holds a short-term bullish bias according to indicators on the daily chart, although the RSI and the MACD have lost some momentum as the price consolidates below the 1.0926 high.
A break above the latter could pave the way to steeper gains, with the 1.0935 standing as the immediate resistance zone, followed by the 1.1000 psychological mark.
On the other hand, the loss of this week’s lows at 1.0835 would expose the next support levels at the 1.0800 area and the 20-day SMA at around 1.0750.