EUR/USD analysis: downside limited despite Fed’s officials’ relief comments
|EUR/USD Current price: 1.1360
- US Fed officials hinted a 25 bps “preventive” rate cut.
- EUR/USD stuck around the 23.6% retracement of its latest bullish run.
The EUR/USD pair eased within familiar levels at the beginning of the day, as the greenback received some demand following comments from Fed’s officials, suggesting that the central bank will cut by 25 basis points as a preventive measure, without changing its decision of reducing the balance sheet. In fact, James Bullard, head of St. Louis Fed, said that he believes a 50 bps cut would be “overdone.” His comments were quite impressive considering he is a well-known dove. Chief Powell also dampened hopes that the central bank will deliver an aggressive rate cut, by saying that he favors acting preemptively, and indicating that the outlook of the FOMC “remains favorable.”
Dollar gains were limited, with the EUR/USD pair stabilizing around 1.1360 during European trading hours, amid the lack of relevant data released in the Union and ahead of US macroeconomic data. The country just released Durable Goods Orders, which came in mixed as the main figure decreased by 1.3%, far worse than the 0.2% advance expected, although the Non-defense ex-aircraft orders increased by 0.4% vs. the 0.1% expected. The country also released April Wholesale Inventories, which were better than anticipated, increasing by just 0.4% MoM.
The EUR/USD pair holds mute at around pre-news levels ahead of Wall Street’s opening, hovering just above the 23.6% retracement of its latest daily rally. In the 4 hours chart, the pair is developing below a bullish 20 SMA, while technical indicators have turned flat around their mid-lines and after correcting extreme overbought conditions, indicating that selling interest receded somehow. The risk of a downward move is quite limited as long as the pair remains above the 1.1325 area, where it has the 38.2% retracement of the mentioned rally.
Support levels: 1.1320 1.1280 1.1245
Resistance levels: 1.1375 1.1415 1.1460
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