EUR/USD struggles to recover on risk aversion, ahead of Fed decision
The EUR/USD pair is picking up on Wednesday after a significant decline on the previous day. From a wider perspective, however, he escalating tensions in the Middle East, the ongoing uncertainty about global trade, and the sharp acceleration in Oil prices are keeping upside attempts limited.
The common currency is now struggling to regain the 1.1500 level, still near 1% below last week's highs, with market sentiment frail as the war between Israel and Iran enters the sixth day, with the US taking a more aggressive tone against the Islamic Republic.
Comments from US administration officials suggesting that President Donald Trump would be considering striking Iran, to confirm a total surrender and the end of its nuclear program, have unnerved investors, wary that the conflict might spill into a regional war in a highly volatile area.
Crude prices appreciated beyond $3 on Wednesday to reach levels close to the $75.00 area, a 16% increase from May's prices, posing additional weight on the Euro. The Eurozone is a net Crude importer, and rising prices would hurt the region's growth prospects.
In the macroeconomic front, US Retail Sales data confirmed the negative impact of trade uncertainty on the US economy, but the US Dollar's reaction was marginal, with geopolitical tensions front and center on investors' minds.
The focus on Wednesday is on the Federal Reserve's (Fed) monetary policy decision and Chairman Jerome Powell's views on how to deal with weakening growth and potentially higher inflation. The US Dollar will be sensitive to changes in the economic projections or the dot plot that might alter interest rate expectations.
Source : Fxstreet
