EUR/USD Daily Forecast – Euro Resumes Higher After a Brief Dip

A decline in EUR/USD in the early week was short-lived as the pair was last seen attempting to break to a two-week high
Jignesh Davda
EUR/USD

Fed Minutes Confirm Policymakers on Hold

The biggest take away from yesterday’s Fed meeting was that policymakers are happy with monetary policy the way it stands and see no reason to act in the near-term. This is in line with what the view was after the actual meeting, and as such, there was a minimal reaction in the market.

It’s quite likely that the Fed will want to see how things play out with the US-China trade war. Risk assets have gained as of late on the expectations that ‘phase 1’ of a deal will be reached soon. However, most of these assets are seen paring back some gains this week as optimism has faltered somewhat.

Nevertheless, with the potential of a deal still out there, I would expect the Fed to stand pat for now. But if trade talks start to veer off course, I do think the markets will once again start exploring the possibility of more easing. Further, incoming data will be important. Especially with fears of an economic slowdown abating as the last few recent data releases have been quite positive.

Technical Analysis

The price action over the week has been interesting and I think it paints a picture of where EUR/USD prices want to go.

For most of the week, the pair has been range bound in a roughly 20 pip range between 1.1063 and 1.1083. Yesterday, we saw some downside pressure which led to a bearish range break.

EURUSD Hourly Chart

We’ve recovered the losses and the pair is on pace to print a fresh two-week high. Looking back at this price action, it looks as if the earlier downward move was a bear trap and that the pair is ready to resume higher.

There is still a fair amount of resistance in play, and I think this should not be ignored. The 20-day moving average is still in play even though EUR/USD prices is currently above it. The 100-day moving average is also within reach. For these reasons, the daily close today will be important.

EURUSD Daily Chart

What is offering a bullish signal here is yesterday’s daily close above 1.1072 despite trading below it for a bulk of the day. In the dollar index (DXY), yesterday’s price action resulted in a doji which is a more prominent signal.

The conservative play might be to wait for a break above the 100-day moving average, for confirmation, and then look to get involved on a pullback.

Bottom Line

  • EUR/USD is breaking upward from a prior range after a fake breakdown.
  • The dollar index (DXY) printed a doji yesterday to suggests the downtrend might have resumed.
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
IMPORTANT DISCLAIMERS
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.
RISK DISCLAIMER
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.
FOLLOW US