EUR/USD Drops on Renewed US Dollar Demand Ahead of FOMC Decision

The euro today dropped to new lows against the US dollar following a resurgent demand for the greenback ahead of the FOMC interest rate decision. The EUR/USD currency pair broke down from its initial sideways trading range in the early American session as the greenback rallied higher.
The EUR/USD currency pair lost over 75 points to decline from a high of 1.2032 to a low of 1.1951 breaching the crucial 1.2000 psychological level.
The currency pair was largely in a consolidative range during the Asian to mid-European sessions trading in a tight range before the start of the American session. The currency pair remained stuck in a trading range despite the release of the Eurozone Q1 GDP data by Eurostat. The Q1 GDP data met expectations by coming in at a quarterly 0.4% and an annualized 2.5%. The Eurozone unemployment rate also met expectations by coming in at 8.5%. The release of the Markit/BME Germany Manufacturing PMI, which met expectations by coming in at 58.1, and the upbeat Markit Eurozone Manufacturing PMI had minimal impact on the currency pair.
The release of the positive US ADP employment change report in the early American session also had a muted impact on the pair. The pair’s decline started slightly later following increased demand for the greenback as tracked by the US Dollar Index, which hit a high of 92.72.
The currency pair’s short-term performance is likely to be affected by the FOMC rate decision scheduled for 18:00 GMT today.
The EUR/USD currency pair was trading at 1.1964 as at 16:08 GMT having declined from a high of 1.2032. The EUR/JPY currency pair was trading at 131.51 having dropped from a high of 132.11.

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