EUR/USD moves to session tops beyond 1.1500

• The pair trades in multi-day peaks above the 1.1500 handle.
• The greenback extends the drop and threatens to visit 95.00.
• German Retail Sales contracted more than expected in December.

The sharp sell-off in the greenback is lifting EUR/USD back to levels beyond 1.1500 the figure today, recording at the same time new multi-day peaks.

EUR/USD propped up by dovish Fed

Spot has gathered extra steam on Wednesday following the FOMC event, where Chief J.Powell sounded more dovish than expected.

In fact, the Federal Reserve now looks more patient regarding its tightening cycle. The Committee will now consider domestic data as well as overseas fundamentals when comes to adjust its monetary policy conditions, expecting to see at the same time a better tone in risk sentiment and higher inflation.

The greenback quickly dropped to fresh 3-week lows in the wake of the FOMC gathering and is now threatening to extend the pullback to the 95.00 neighbourhood.

In the data space, German Retail Sales contracted at a monthly 4.6% during December, missing consensus. Spanish flash inflation figures now see consumer prices contracting 1.3% MoM in January and rising 1.0% from a year earlier. Later in the day EMU’s advanced Q4 GDP figures are also due.

What to look for around EUR/USD

USD-dynamics will drive the sentiment in the pair in the very near term, showing some upside potential in response to the renewed ‘patient’ stance from the Federal Reserve. However, fundamentals in the euro region are not something to write home about and this carries the potential to weigh on the single currency in the next months. Politics in Euroland will also be a factor to have in mind, with EU parliamentary elections coming up in May and investors closely following the social scenario in France and populist developments in Italy.

EUR/USD levels to watch

At the moment, the pair is gaining 0.22% at 1.1504 facing the next up barrier at 1.1514 (high Jan.31) seconded by 1.1515 (50% Fibo of the September-November drop) and finally 1.1569 (2019 high Jan.9). On the flip side, a breakdown of 1.1446 (100-day SMA) would target 1.1388 (55-day SMA) en route to 1.1323 (200-week SMA).