EUR/USD analysis: painfully advancing ahead of Fed
|EUR/USD Current Price: 1.1354
- EU Construction figures disappointed, but the ZEW survey showed economic sentiment improved.
- The US Central Bank is expected to maintain the status quo, downgrade economic projections.
The EUR/USD pair advanced for a third consecutive day, establishing a new weekly high by a couple of weeks above the previous one, at 1.1361. The intraday range, however, was of measly 30 pips, despite there were multiple possible catalysts for price action. Brexit-related headers kept coming, with tension mounting as no deals are achieved inside or outside the kingdom. In the EU, macroeconomic data disappointed as usual, as Construction Output was down by 1.38% MoM in January against a 0.20% advance expected, while the yearly reading resulted at -0.7%. The German ZEW survey showed that Economic Sentiment improved by more than expected in March, resulting in -3.6 for the country and at -2.5 for the whole Union, this last recovering from -16.6 in February. The US published January Factory Orders, which posted a modest 0.1% MoM advance against the market's expectations of 0.3%. More relevant, there was a report making the rounds indicating that some US officials said that they see China backing trade offers, which sent equities down from daily highs. A setback in the trade war between China and the US is the last the dollar needs these days. The news anyway, was later overshadowed by Dow Jones sources reporting trade talks are progressing to their final stages.
The US Federal Reserve is undergoing its 2-day meeting and will publish its latest decisions this Wednesday. No changes to the ongoing policy are expected, but given that the central bank will offer fresh economic projections, action is granted. The market is anticipating some downgrades, particularly referred to future rate hikes, the main reason why the greenback remains on the weak side.
The EUR/USD pair holds on to gains, hovering near weekly highs, and short-term bullish despite no follow-through. In the 4 hours chart, the 20 SMA continues advancing below the current level, having already crossed above the 100 SMA and about to surpass the 200 SMA, usually a sign of further gains ahead. The Momentum indicator in the mentioned chart heads north at fresh weekly highs, while the RSI continues consolidating just below overbought territory, currently at 64, all of which maintains the risk skewed to the upside, with room for a test of 1.1419, the high achieved on February 28.
Support levels: 1.1330 1.1290 1.1255
Resistance levels: 1.1375 1.1420 1.1460
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