• EUR/USD consolidates above 1.2000 after hitting multi-year highs at 1.2082 on Tuesday.
• The USD plunged on Tuesday following Trump's comments praising the currency's depreciation.
• The Fed is set to announce its monetary policy decision on Wednesday amid growing concerns about its autonomy.

The Euro shows moderate losses on Wednesday, retreating to 1.1985 at the time of writing, from over four-year highs at 1.2082 hit on Tuesday. The US Dollar is picking up as the impact of US President Donald Trump's comments, praising the US Dollar’s (USD) depreciation, diminishes, and the chances of further European Central Bank (ECB) monetary easing increase.

ECB board member Martin Kocher put a lid on the Euro rally, opening the doors to a further interest rate cut in July if the common currency's appreciation starts to undermine the bank's inflation projections. Eurozone money markets have boosted the odds of a July rate cut to 25% from around 15% on Tuesday, according to data released by Reuters.

The pair had rallied about 1.24% on Tuesday after Trump said in a visit to Iowa that the current US Dollar value "is great" and that the currency has not fallen too low, which provided investors with fresh reasons to sell the Greenback.

The focus on Wednesday shifts to the Federal Reserve (Fed), which is widely expected to leave interest rates unchanged, although investors’ attention is likely to be on the bank’s autonomy. The US president’s plans to replace Jerome Powell with a more dovish Fed chairman, the efforts to oust Fed Governor Lisa Cook, and the criminal investigation have put the independence of the central bank into question.
 

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
 

Daily Digest market Movers: The Euro remains firm despite dovish ECB comments

• ECB official Martin Kocher has brought interest rate cuts back to the table, undermining the Euro's strength, although the impact on the EUR/USD has been mild. The US Dollar remains vulnerable, amid a combination of Trump’s erratic trade policies, higher government spending and his will to influence the Fed's monetary policy, altogether eroding the status of the US Dollar as a reserve currency.
• Apart from that, markets remain wary about a potential US-Japan coordinated intervention to support the Japanese Yen. News of rate checks by the Fed and the Bank of Japan (BoJ) on Friday acted as the strongest intervention warning so far this year and prompted speculative investors to scale down their USD/JPY long positions.
• US macroeconomic data failed to support the Greenback on Tuesday. The Conference Board's Consumer Confidence index fell by 9.7 points to 84.5 in January, its lowest level in more than 11 years, from an upwardly revised 94.2 in December, weighed by increased concerns about the labour market and the rising prices.
• The US ADP Employment Change 4-week average endorsed those views, as net jobs decreased for the third consecutive week, to an average of 7,750 jobs per week, from 8,000 the previous week.
• In the economic calendar on Wednesday, the highlight is the outcome of the Fed's monetary policy meeting. The bank is widely expected to leave rates at the current 3.50%-3.75% range and hint at steady rates for the foreseeable future. The questions about the bank's independence and the replacement of chairman Powell, whose term ends in May, are likely to grab investors' attention.
   

Technical Analysis: EUR/USD looks ripe for a correction
 

(Click on image to enlarge)

The EUR/USD pair has found resistance at the 251.8% Fibonacci extension of the January 16-20 uptrend, in the 1.2080 area. This is a common exhaustion level, which, together with the oversold momentum indicators, points to a potential correction, or at least some consolidation. Downside attempts, however, remain contained above the 1.1980 so far.

Technical indicators show an overstretched rally. The Moving Average Convergence Divergence (MACD) line keeps trending higher on the 4-hour chart, but the Relative Strength Index (RSI) is well above 70, levels that might cap further advances.

Bears should break intraday lows of 1.1980 to confirm a correction and shift the focus towards the January 26 high at 1.1907. On the upside, above Tuesday's high at 1.2082, there is no clear resistance until the 2021 peak, in the 1.2165 area.

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