EUR/USD Daily Forecast – Euro Holds Below Resistance Ahead of Fed Minutes

EUR/USD fell under pressure in North American trading on Tuesday as investors brushed off weak US data. However, the pair has regained some momentum in the early day and has wiped most of yesterday’s loss.
Jignesh Davda

Trade War Progress to Offer a Catalyst for EUR/USD

There are a lot of things impacting EUR/USD at the moment, but trade talks taking place this week appear to be the most important factor for the exchange rate.

Yesterday, Fed Chair Powell reaffirmed the central bank is willing to do what’s necessary to sustain the expansion. Considering the string of weak US data as of late, investors viewed this as confirmation that another rate cut is coming. The CME’s FedWatch tool shows the market’s pricing in an 85% probability of a rate cut at the Fed meeting later this month.

Investors are looking towards the minutes of the last meeting for further clues as to what it would take for one more cut. The Fed cut rates at the last meeting although the decision was not unanimous. Two members had preferred to keep the interest rate unchanged. Meanwhile one member wanted a more aggressive 50 basis point cut.

The US-China trade war weighs heavily on Fed decisions and might be the largest focal point for EUR/USD traders. High-level talks will take place this week and there will certainly be an increase in headline risk for the pair.

Technical Analysis

Considering that the Fed’s next decision will be largely influenced by how trade talks progress this week, I don’t think there will be a big reaction to the meeting minutes that will be released later today.

EURUSD 4-Hour Chart

EUR/USD trades at an important resistance confluence as the 20-day moving average, which confluences with the psychological 1.1000 level, has been capping recent gains. Further, there is resistance from the upper bound of a declining trend channel. This channel has encompassed price action since late June.

It would not be surprising to see the pair continue to range below this important resistance area. At least until there is some further clarity on how trade talks are progressing.

Bottom Line

  • EUR/USD continues to range below important resistance.
  • Minutes from the last Fed meeting will be released later today. However, they may not have a big impact on the pair.
  • High-level trade talks will take place this week. This could be the biggest driver for the pair in the near-term.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
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.