EUR/USD ends a dreadful week

FXStreet (Edinburgh) - Another unsuccessful attempt to break above the critical resistance band at 1.1040/60 at the beginning of the week seems to have sparked a correction of more than 4 big-figures in EUR/USD. In fact, spot eroded the gains of the previous two weeks and returned to levels last seen in mid-March around 1.0580 following a violent resurgence of the US dollar.

There was no significant trigger or major event behind the USD comeback. However, the FOMC minutes last Wednesday could well be a good catalyst, as market consensus was tilted to a dovish tone prior to the release. The markets’ perception was quite the opposite: recall that some members of the Committee advocated for a rates lift-off in June and a couple of members in early 2016, although the majority preferred to hike rates later this year (September could be a good candidate). The Committee also argued that a rates hike could come before an increase in core prices or wage inflation. The minutes gave the greenback unexpected further tailwinds, intensifying as a consequence the drop in spot.

The situation surrounding Greece seems to have entered in an ‘impasse’ (or limbo?) until the next Eurogroup meeting due on April 24, all amidst the usual rumours that the country could run out of money in the upcoming days. The increasing uncertainty has also been a source of weakness for the EUR, adding to the selling interest.