EUR/USD inter-markets: focus on FOMC

EUR/USD keeps pushing higher this week, although it seems to have found strong resistance around the 1.1100 handle for the time being. Of course, the exclusive catalyst behind the current up move still lies on the USD political-side, as the surprising lead by Republican candidate and businessman D.Trump vs. Democrat candidate H.Clinton has been taking a toll on the buck.

In fact, the US Dollar Index has abruptly retreated to fresh 3-week lows well below the 98.00 mark in response to the uptick of D.Trump in recent election polls, allowing EUR/USD to gain more than 2 cents since last week’s lows in the mid-1.0800s.

Yields in the German Bunds area trading deep into the negative territory today along with their American peers, while Fed Fund futures have dropped to multi-day lows. Recall that ahead of the FOMC meeting today, CME Group’s FedWatch tool is signaling the probability of a rate hike by the Fed at the December meeting at above 68%.

Volatility tracked by VIX keeps the area of recent peaks, supporting the case for a pick up in the demand for EUR.

It will be all about the FOMC meeting today. Market expectations see the Committee delivering a hawkish statement, which could add to the case for higher rates by year-end. However, and as market participants have already priced in a Fed’s move in December, the greenback risks remaining apathetic on the event, as it remains heavily influenced by the upcoming US elections and particularly by the prospects of a Trump’s win.

In case the pair’s upside gains extra pace, the next transitory resistance levels emerge between 1.1135 and 1.1190, where sit the 55-, 100- and 200-day sma, ahead of the more relevant resistance line off 2016 tops, today just below 1.1200 the figure.