The single currency regains the smile and pushes EUR/USD back to the mid-1.1700s on Wednesday. EUR/USD is quickly fading Tuesday’s bearish performance and it has regained traction well above 1.17 the figure, opening the door to a potential visit to recent 22-month peaks in the 1.1780/85 band. In the meantime, the focus of attention remains on the progress of the economic recovery in the Old Continent vs. the pick-up in COVID-19 outbreaks across the world, which has already sparked fears of a second wave of the coronavirus pandemic ahead of the fall and winter.

In the docket, Spanish Retail Sales contracted at an annualized 4.7% in June, while Producer Prices are due in Italy later in the session. The most important event, however, will be the FOMC event across the pond. The consensus among investors sees no change in the monetary policy stance although the Fed could probably strengthen its forward guidance and could shed further detail on the potential implementation of yield curve control (YCC). Furthermore, market participants expect Chief Powell’s press conference to gyrate around the health of the US economy and prospects of recovery in the current context.