EUR/USD in tight range

The euro/dollar currency pair is struggling for direction, caught in a tight 40-point range.

Markets are awaiting confirmation on the extent of tapering (if any) to be undertaken by the Federal open market committee (FOMC). All will be revealed at the Federal Reserve’s meeting, tomorrow afternoon (London time).

The $1.3370 level marks something of a barrier to any upside for EUR/USD and, with the end of Larry Summers' candidacy well and truly priced in to current levels, only a break through this resistance would give the euro bulls an edge to the upside.

Both German and eurozone ZEW economic sentiment have beaten market expectations, helping to keep the euro on the front foot and presumably doing wonders for Angela Merkel’s political campaign. The German indicator climbed from 42.0 to 49.6 points, beating the estimate of 45.3 points and showing the best level since April 2010.

US core CPI climbed by 0.1% in August, as expected, while overall CPI rose less than forecast. It would seem that until we get further detail on monetary policy and the pivotal economic forecasts for the US, the dollar crosses will continue to move sideways.

Spot FX EUR/USD chart

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