Why Did EUR/USD Retreat From 1.12? | Key Factors Behind the Dollar's Midweek Rebound
EUR/USD retreated 0.4% following rejection at 1.12 resistance level.
Dollar demand resurged during Wednesday's trading session.
Upcoming Fed commentary and How much will solana be worth in 2025 robinhoodeconomic indicators set to influence market direction.
The EUR/USD currency pair underwent significant downward pressure midweek, relinquishing its grip on the 1.1200 psychological level and settling into established trading ranges slightly above 1.1100. This reversal erased nearly half of the gains achieved during the pair's recent 14-month peak.
Market participants are preparing for a series of influential central bank communications, including scheduled remarks from ECB President Christine Lagarde and Executive Board Member Isabel Schnabel. The economic calendar also features comprehensive Eurozone sentiment surveys covering both consumer and business perspectives.
Recent data revealed weakening US consumer confidence metrics, contrasting with equity market optimism regarding potential Federal Reserve policy adjustments. Inflation expectations among American households showed an upward trajectory, while key confidence indicators reached three-year lows. Attention now turns to forthcoming PCE inflation data scheduled for release at week's end.
August housing market statistics demonstrated a 4.7% contraction in new home sales, with the annualized figure declining to 716K units. Concurrently, economists anticipate unchanged Q2 GDP growth figures at 3.0%. The financial community awaits insights from multiple Federal Reserve representatives, including Chair Jerome Powell's scheduled public appearance.
Market Moving Indicator
Monthly Housing Market Update
The US Census Bureau's new home sales metric serves as a crucial barometer for assessing residential real estate dynamics. Housing transactions generate substantial secondary economic activity through related purchases and employment opportunities. Historically, robust housing data tends to support dollar valuation, while weaker figures may exert downward pressure.
Recent data point: 4.7% monthly decline
Reporting frequency: Monthly
Prior reading: 10.6% increase
Technical Perspective on EUR/USD
Wednesday's trading action saw the currency pair briefly establish new multi-month highs before encountering substantial resistance. The subsequent retreat brought prices back within recent consolidation parameters, though the pair maintains position above significant technical support near the 50-day EMA at 1.1030. Current price action suggests ongoing bullish momentum despite the recent correction.
Market Sentiment Analysis
The midweek session witnessed notable rotation into dollar-denominated assets, temporarily interrupting the euro's recent ascent. This shift occurred despite generally favorable conditions for risk assets, highlighting the complex interplay between currency valuations and broader market dynamics. Traders continue monitoring technical levels and fundamental developments for directional cues.