EUR/USD reversed course after briefly rising above 1.16 in early trading Tuesday and losing its daily gains ahead of the US session, trading around 1.1572.
Ahead of the release of US economic data and testimony from the head of the Fed, the US dollar index managed to erase its losses and rose above 94.00, reflecting the renewed strength of the US dollar.
In the next trading, the US dollar turned lower again so that EUR/USD turned up to 1.1588.
Additionally, comments from central bank officials added to the downside pressure on EUR/USD.
ECB chief economist Philip Lane sticks to the tentative inflation narrative and holds a relatively optimistic view of the economic outlook.
On the other hand, President of the Federal Reserve St. Louis, James Bullard told Fox Business Network that he expects the Fed to raise interest rates twice next year.
From comments from European and US central bank officials, the contradictory monetary policy between the US Federal Reserve and the ECB became clearer after the Fed’s decision to taper its asset purchases.
Meanwhile, ECB policymakers continue to remind markets that they are not in the mood to raise interest rates and that they see current inflation as temporary.
The nearest “support” awaits at 1.1530 which if successfully passed will continue to 1.1500 and then 1.1470. The nearest “resistance” awaits at 1.1610 which if it is successfully passed it will continue to 1.1650 and then 1.1670.