James Hyerczyk
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The Euro is trading higher against the U.S. Dollar on Thursday following the Federal Reserve’s move on Wednesday to cut its benchmark interest rate 25-basis points. This move was widely expected. However, what surprised investors was Fed Chairman Jerome Powell saying that any future move to increase borrowing costs would have to be preceded by a meaningful and consistent uptick in inflation, the rate at which prices rise in the U.S. economy. That could mean a long wait until the next hike, with the Fed’s preferred inflation gauge showing little signs of breaking out anytime soon.

At 10:48 GMT, the EUR/USD is trading 1.1165, up 0.0015 or +0.13%.

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What we’re seeing today is position-adjusting and some light speculative buying in reaction to Powell’s dovish comment about future rate hikes. Although the EUR/USD is showing strength today, the rally is likely to be short-lived because the U.S. economy is still stronger than the Euro Zone economy as confirmed by yesterday’s report showing GDP rose 1.9% last quarter, higher than expected.


Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1179 will signal a resumption of the uptrend following nearly two weeks of lower momentum. A trade through 1.1073 will change the main trend to down.

The next upside target is the long-term Fibonacci level at 1.1185. Overtaking this level will indicate the buying is getting stronger.

The minor range is 1.1179 to 1.1073. Its 50% level support comes in at 1.1126. If this level fails then look for the selling to possibly extend into the next minor support level is at 1.1085.


Daily Technical Forecast

Based on the early price action and the current price at 1.1165, the direction of the EUR/USD is likely to be determined by trader reaction to the downtrending Gann angle at 1.1159.

Bullish Scenario

A sustained move over 1.1159 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main top at 1.1179, followed closely by the Fibonacci level at 1.1185. This is the trigger point for an acceleration to the upside with the main top at 1.1250 the next major upside target.

Bearish Scenario

A sustained move under 1.1159 will signal the presence of sellers. The first downside target is a downtrending Gann angle at 1.1139, followed by the minor 50% level at 1.1126. Taking out this level could trigger a plunge into the next uptrending Gann angle at 1.0989.

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