EUR/USD stretches to fresh lows with eyes on FOMC

By | Updated July 30, 2014 AAA

FXStreet (Córdoba) - The EUR/USD trades below 1.3400 for first time in over 8-months as the recent bearish bias was fueled by better-than-expected US GDP Wednesday.

The US economy grew 4.0% in 2Q according to preliminary data released today, versus a 2.1% fall the previous quarter. Meanwhile, inflation measured by the PCE deflator, rose 2.3% above Fed’s target. Solid growth and inflation data propelled the greenback across the board and sent the EUR/USD to an 8-month low of 1.3366 during the New York session.

Attention now turns to the FOMC decision due at 18:00 GMT. The Federal Reserve is expected to reduce its monthly bond purchases for the sixth time to $25 billion from $35 billion. In the absence of surprises, dollar reaction should be limited and short-lived.

EUR/USD technical levels

At time of writing, the EUR/USD is trading at 1.3372, 0.26% below its opening price with next supports lining up at 1.3359 (Nov 12 2013 low) and 1.3300/1.3295 (psychological level/Nov 3 2013 low). On the other hand, resistances are seen at 1.3421 (200-week SMA broken today), 1.3444 (Jul 28 & 29 highs) and 1.3465 (10-day SMA).

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