EUR/USD Daily Price Forecast – EUR/USD Turns Bearish Post Hawkish Update from US FOMC Meet

The dollar rose on Thursday as investors bought the greenback on the back of political turmoil in Australia and after the minutes of the Federal Reserve’s latest policy meeting indicated the U.S. central bank is on course to further raise interest rates. While the euro has risen for six consecutive sessions, the dollar managed to make up some of its losses against the common currency after the minutes showed Fed officials discussed raising interest rates soon to counter U.S. economic strength. The Fed has raised rates twice this year and is widely expected to tighten policy again next month after leaving rates unchanged at its last meeting. But dealers said political pressure on U.S. President Donald Trump and worries about a Sino-U.S. trade war continued to weigh on the dollar as the Fed’s minutes also showed officials examined how global trade disputes could affect businesses and households. The Fed seems to be quite concerned about the trade issues and If those concerns materialize market expectations for a rate hike might change depending on the outcome of U.S.-China trade negotiations.

The Pair’s Downside is Capped Due to Geo-Political Events That Put Pressure on US Greenback

As of writing this article, EURUSD pair is trading at 1.1555 down 0.34% on the day. A rate hike in near future would mean the rate differential is set to widen further in the USD-positive manner in the near future which provides great deal of support to USD bull in immediate and near future trading sessions. The reason why dollar bulls was not able to make use of support from hawkish fed update to gain the upper hand is because Dollar is still pressured by multiple geo-political events such as 25% tariff on Chinese goods worth $16 billion kicking in today despite talks to ease trade war between China & US which saw Chinese government retaliate with equal tariff on US Goods and US market which saw news of two former campaign advisers of the US President Donald Trump being found guilty on a range of charges. Making it worse for the greenback, Michael Cohen’s attorney Lanny Davis said that Cohen has knowledge of a Russian conspiracy there is no dispute that Trump committed a crime.

The latest development triggered a global risk-aversion trade, benefitting the USD’s safe-haven appeal and exerting some downward pressure on the major during the Asian session on Thursday. However the pair seems to continue a range bound momentum as both sides of pair lack a major trigger to help gain upper hand over the other. Looking ahead, the EUR/USD could extend the decline to 1.15 if the German and Eurozone PMIs, scheduled for release today, show the trade war is having a negative impact on the Eurozone economy. The EUR traders should also keep an eye on the Italian government borrowing costs. The 10-year Italian government bond yield created a bullish outside-day candle yesterday and hence looks set to rise in the EUR-negative manner. Expected support and resistance for the pair are at 1.1527, 1.1508, 1.1497 and 1.1577, 1.1610, 1.1628 respectively.