EUR/USD Daily Forecast – Euro Little Moved After GDP and CPI DataEUR/USD has fallen into a tight range in the early week as market participants await the outcome of today’s Fed meeting.
European Data Beat Fails to Elicit a Rally
Data released in the early day was mostly better than expected but did not prompt much of a move in EUR/USD. Trader’s are eagerly awaiting today’s Fed decision which seems to have triggered a tight range in EUR/USD.
Euro area unemployment was reported at an 11-year low of 7.5% on a seasonally adjusted basis. Greece and Spain both reported double digit unemployment rates which were the highest among the Member States.
GDP rose 0.2% in the Euro area during the second quarter, in line with the analyst estimate. Euro-area inflation, although ahead of expectations, eased lower to 1.1% this month, down from 1.3% in June.
The Federal Reserve Decision is Likely to Trigger a Break in EUR/USD
EUR/USD has been contained within a range set during the ECB meeting last week. A breakout appears probable with the Fed decision due later in the day.
It is widely expected that the Fed will reduce the interest rate for the first time since 2008. Most analysts are expecting a quarter basis point cut, although a few have forecasted a half-point cut even.
Recent Fed communication attributes the dovish shift to subdued inflation levels, weak global growth, and increasing risks from ongoing trade talks with China.
The Fed meeting should set the near-term tone for EUR/USD which is on the verge of breaking to multi-year lows.
So far, support at 1.1118 has been holding the pair higher. It also offered support in April and in May as well. Considering the heightened volatility expected around the Fed meeting, I can easily see the pair dipping below the level in the same manner that it did during the EBC meeting.
It will be important to get confirmation of a downside break on a bearish move. In such a case, the levels I’m watching to the downside are 1.1030 followed by the psychological 1.1000 handle.
To the upside, resistance at 1.1188 is the same level that held the pair lower following the ECB meeting last week. A break above it could see the pair testing 1.1275.
- EUR/USD is range bound but a break is expected as a result of today’s Fed meeting.
- Major support is in play at 1.1118. A break could see the pair making a run at the psychological 1.1000 level.
- To the upside, a break of 1.1188 exposes 1.1275.