Higher In Wake Of FOMC & China Equity Rally

EUR/USD has ultimately benefitted from the broader USD weakness evident over the previous 12 hours or so. The FOMC statement saw the cross tap fresh session lows on Wednesday with some modestly hawkish tweaks evident, before Fed Chair Powell refined the central FOMC message and assured markets that tightening was not imminent, allowing the rate to make fresh intraday highs ahead of the NY close.• The USD weakness extended in Asia, with Chinese equities trading on the front foot on the back of a (modest) net liquidity injection from the PBoC, supportive tones coming from state-owned media (again) and suggestions (per CNBC sources) that China would continue to allow domestic firms to list in the U.S. That leaves the rate dealing 15 pips higher on the day, at $1.1860.• Early morning comments from ECB Executive Board member Panetta have reaffirmed the idea that ~1.5% inflation is "not enough" for the Bank, while he underscored the broader belief that risks of high inflation & overheating are limited i.e. promoting the need for continued monetary support.• German regional and national CPI data is due to be released on Thursday, with German unemployment and Eurozone consumer confidence data also due.• Our technical analyst believes that gains in the rate are still considered corrective, in line with a bearish trend direction. A continuation higher however would suggest scope for a stronger corrective bounce ahead of the 50-day EMA ($1.1917). A clear break of this average is required to signal a more significant reversal. On the downside, the bear trigger is located at the Jul 21 low ($1.1752)• Looking to today's 10AM NY cut, clusters of notable option expiries are as follows: $1.1795-1800 (EUR1.3bn), $1.1850-70 (EUR3.0bn).