US Dollar Falls on Improved Risk Appetite - Fed Announcement Could Impact FX Trade on Wednesday
The euro consolidated its recent gains against the US dollar on Tuesday, holding in a tight range of roughly 1.2950 - 1.3025. Resistance from the 100 SMA looms above at 1.3058, suggesting a further correction lower may be possible, but ultimately EUR/USD seems likely to continue gaining in light of the bearish turn lower in the DXY index. Meanwhile, the economic view of the Euro-zone remains fairly mixed, as this morning’s release of the German ZEW survey of investor sentiment reflected a divergence in opinion on current conditions and the economic outlook. Indeed, the index of sentiment on the current situation is forecasted to fall to a more than 5-year low of -89.4 from -86.2 while the outlook actually rose to -3.5 - the best reading since July 2007 - from -5.8. Overall, the data reflects the weak status of the Euro-zone’s largest economy, but also indicates that investors hold some hope that the European Central Bank’s policy efforts will help to encourage both economic and financial market recovery.
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