While oil market remains the key drivers for the global financial markets, risk sentiment looks subdued, as rising geopolitical tensions in the Middle East curb the appeal of high-yielding assets. Against this backdrop, EURUSD has been on the defensive since the start of the week and has settled around the 1.10 handle.
Late last week, the pair failed to get back above the 1.11 intermediate resistance and since struggles to regain the upside momentum. In the near term, the euro dynamics could be affected by German and Euro zone ZEW data and US industrial production report. Also, the European CPI numbers due tomorrow could spur a rebound in the pair should consumer prices get back to the positive territory.
More importantly, the Federal Reserve meeting that concludes on Wednesday may send the common currency higher as the central bank is expected to deliver a 0.25% rate cut. This, along with downward revision in the Fed’s dot-plot may trigger a bearish reaction in the greenback across the board. In this scenario, EURUSD could regain ground and challenge the 1.11 barrier. A daily close above this level will improve the short-term technical picture.