EUR/USD retreats from four-month highs toward 1.14000

• US dollar recovers ground as Wall Street moved off highs.
• The dominant trend remains bullish in EUR/USD, current slide seen as corrective.

The EUR/USD pair peaked after the beginning of the American session at 1.1451, the highest level since March 10. Then it corrected lower falling toward 1.1400. So far, it has been able to remain above, but the bearish pressure persists.

The move lower was triggered by a recovery of the US dollar across the board. The DXY erased most of its losses and recovered from weekly lows, rising back above 96.00. Deterioration in risk sentiment boosted the US dollar. The Dow Jones is up by 0.80%, 150 points below the daily high, while Nasdaq gains 0.35%. Optimism about a vaccine for COVID-19 continues to support markets.

Earlier on Wednesday, the US dollar failed to benefit from better-than-expected US economic data. In a few minutes, the Federal Reserve will release the Beige Book.

In Europe, the key event ahead is the European Central Bank meeting on Thursday. “The ECB made its big decisions in June, leaving no real probability of a change in stance now. Focus is on the press conference, where we look for Lagarde to be a bit more upbeat on the macro outlook, but firmly committed to delivering the full €1.35tn PEPP”, explained analysts at TD Securities.

Technical levels