EUR/USD retained losses before Fed policymakers meet

The euro was trading on lower levels against the US dollar on Friday, as market players remained wary ahead of the possible announcement of asset purchase tapering by the Federal Reserve Bank next week.

EUR/USD slid to a session low at 1.3264 at 5:43 GMT, after which consolidation followed at 1.3280, falling 0.15% on a daily basis. Support was to be found at September 10th low, 1.3231, while resistance was likely to be seen at August 29th high, 1.3341.

Having experienced selling pressure earlier in the week, especially after the disappointing non-farm payrolls report out of the United States on September 6th, the greenback managed to put to a halt its decline against major peers on prospects that the Federal Open Market Committee (FOMC) will make a decision to reduce its bond-buying program, which has so far helped to devalue the US dollar. The Federal Reserve Bank is expected to decelerate its monthly asset purchases to 75 billion USD from the current pace of 85 billion USD at its September 17-18th meeting, according to the median estimate of experts, surveyed by Bloomberg News on September 6th. Policymakers have pledged to maintain the benchmark interest rate close to zero at least as long as unemployment rate in the country exceeds 6.5%, while inflation outlook is no more than 2.5%, with the 2% target considered as keeping prices stable. Also, the Federal Reserve will release its economic projections for 2016 next week for the first time, including the outlook for the benchmark interest rate, Bloomberg imparted.

“The uncertainty about the FOMC is what do they do to their forecasts now that they’re rolling over into 2016, how do they characterize the threshold level of unemployment for the first rise in the Fed funds rate, and also on who’s going to lead the Fed over the next few years,” Andrew Salter, a currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney, said in an interview, cited by the same media.

In addition, on Thursday the Department of Labor said that the number of initial jobless claims in the United States dropped by 31 000 to 292 000 during the week ending on September 7th, marking their lowest point since April 2006. Experts had anticipated that claims will rise to 330 000, following the non-revised 323 000 claims during the preceding week.

Meanwhile, the euro was lower against the sterling, with EUR/GBP cross losing 0.12% for the day to trade at 0.8406 at 7:12 GMT. EUR/JPY pair, on the other hand, was gaining 0.08% today to trade at 132.51 at 7:14 GMT. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rose to 81.715 during Fridays Asian trade, as it stood at 81.513 during the late phase of US trade yesterday.