EUR/USD analysis: at risk of falling further, Fed in the eye of the storm
|EUR/USD Current price: 1.2288
- Political uncertainty left the pair directionless for a third consecutive week.
- US Federal Reserve expected to pull the trigger this Wednesday.
The EUR/USD pair ended a third consecutive week little changed around the 1.2300 level, as political uncertainty overshadowed macroeconomic data, preventing the development of a certain trend in the pair. Headwinds for the common currency came from ECB's members, who reiterated that sluggish inflation will keep QE in place for longer, cooling down expectations of a more aggressive European Central Bank. EU February CPI released on Friday reinforced the idea, as inflation rose 1.1% YoY, below the previous and market's expectations. Data coming from the US was mixed but overall positive. The greenback couldn't run, however, on Trump's decision to fire advisors and replace them with people more akin to his stance, particularly in foreign policy.
This week, the US Federal Reserve will gather all of the market's attention, as it will be the first with Jerome Powell as head and the market is expecting him to raise rates for the first time this year, in order to achieve the anticipated four hikes. The announcement is mostly priced in, and if the Fed disappoints by staying on hold, market's reaction will be more intense against the greenback that positive for the currency if they hike rates.
Daily basis, the pair seems to have lost bullish momentum, with a descendant trend line now coming at around 1.2380 for these upcoming days. The pair closed below a directionless 20 DMA, still holding some 200 pips above a bullish 100 DMA, while technical indicators diverge on direction around neutral territory, reflecting the ongoing uncertainty rather than anticipating next move. Shorter term, and according to the 4 hours chart, the risk is skewed toward the downside, as the pair settled below all of its moving averages that anyway remain directionless, while technical indicators hold near oversold readings, but with no directional strength. The 1.2260 region is the immediate support, with a break below it opening doors for additional declines ahead.
Support levels: 1.2260 1.2220 1.2180
Resistance levels: 1.2300 1.2335 1.2380
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.