EUR/USD Daily Price Forecast – EUR/USD Trades Flat Ahead of FOMC Update

The EUR/USD pair extended its recent corrective rally for the fourth consecutive session on Tuesday and touched a fresh 1-1/2 week high level of 1.1601. The US President Donald Trump’s critical comments on the Fed’s policy tightening kept exerting downward pressure on the US Dollar and turned out to be one of the key factors driving the pair higher. The USD selling pressure abated, at least for the time being, near the key 95.00 psychological mark, after Dallas Fed President Robert Kaplan supported prospects for three or four more “gradual” interest-rate hikes before the central bank pauses to assess the outlook for the economy. Hence, today’s key focus would be on the latest FOMC meeting minutes, anticipated to reaffirm the optimistic economic outlook and a September rate hike move.

USD Likely To Gain Upper Hand On FOMC Update

However it is highly unlikely for the common currency to see upside movement in near future as former Trump lawyer Michael Cohen’s testimony could hurt the risky assets. S&P 500 futures did drop 0.5 percent in early Asia in response to Cohen’s testimony, so the equities in Europe could trade on a cautious note. Further, they have a bigger reason to trade risk averse – the US President Trump said yesterday night that the US would slap a 25 percent tariff on cards coming from the European Union. Trump’s comments are likely to put the focus back on the trade war and that could limit the upside in the common currency.

It is worth noting that despite Trump’s criticism of Powell’s rate hike plan, the markets are still discounting 75 basis points of hiking by December 2019. As a result, the USD could catch a bid ahead of the Fed minute release. As of writing this article, the EURUSD pair is trading at 1.1577 up 0.07% on the day , after consolidating around 1.1565 to 1.1582 price handles in late north american market hours. From a technical perspective, the pair stalled its recent recovery move ahead of 50-day SMA and mixed technical indicators are yet to catch up with the recent positive momentum and hence, any subsequent up-move beyond the mentioned hurdle is likely to confront stiff resistance at a short-term descending trend-line, extending from mid-May, currently near the 1.1680 region. On the flip side, the 1.1540-35 horizontal zone now seems to protect the immediate downside.