Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Jignesh Davda

A Week Filled with Risk Events for EUR/USD

After a period of unusually low volatility, EUR/USD is starting to come alive with several risk events to provide the markets a catalyst.

Yesterday, the Federal Reserve monetary policy meeting drove EUR/USD above the 1.1100 handle for the first time since the early month.

Know where EUR/USD is headed? Take advantage now with 

75% of retail CFD investors lose money

Policymakers kept rates unchanged which was largely expected. The main message was that rates, and inflation, are likely to stay at current levels for quite some time.

Powell reiterated that the current dynamics are not what they once were when it comes to upward inflationary pressures. As a result, it doesn’t seem likely that rates will be need to be raised anytime soon. At the same time, he communicated that the economy is on pace for moderate growth and continued record unemployment which removes the need to implement further monetary policy easing.

Despite the message, the markets continue to expect another rate cut in the United States, albeit with much less confidence. The futures markets are now showing a roughly two out of three probability for one more cut by the end of 2020.

Investors will shift their attention to European monetary policy as the ECB will announce their latest rate decision and hold a press conference later today. EUR/USD is showing some upward momentum, but a more dovish than expected ECB is probably needed to continue this momentum.


Technical Analysis

EUR/USD found a base this week after testing a confluence of the 50 and 100-day moving averages. The upward momentum gained yesterday as a result of the Fed meeting, leading to a bullish break of a declining trendline.

EURUSD 4-Hour Chart

The trendline is now seen as support in the session ahead and falls near the 1.1100 price point. The pair is currently hovering near a horizontal level at 1.1129. This is a price point that has been relevant on a daily chart in the second half of the year.

To the upside, a potential target might be the 50-week moving average. This indicator is currently converging towards the November highs around 1.1175.

Bottom Line

  • EUR/USD is showing renewed upward momentum following the Fed meeting.
  • The ECB is up next and the pair stands to be impacted by the UK election which takes place today.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.