EUR/USD analysis: positive, but Fed to seal dollar's fate
|EUR/USD Current price: 1.1999
The EUR/USD pair managed to extend its weekly advance up to 1.2005 this Tuesday, ending the day right below the 1.2000 threshold. With the pair dangerously close to the level, news agencies hit the wires indicating that the ECB may delay decisions on QE tapering, as policymakers can't agree on when to terminate the facilities program. EUR strength was blamed for such decision, according to "people familiar with the matter." As it happened earlier this month, the ECB is trying to keep the EUR limited below the 1.2000 threshold. In the news, data came mixed from both shores of the Atlantic, as in Europe, the German ZEW survey showed that business sentiment improved beyond expected in the country, but lagged for the whole EU. In the US, housing starts slipped 0.8% to a seasonally adjusted annual rate of 1.18 million in August, although building permits surged 5.7% to a rate of 1.30 million. The US current account deficit rose to its highest level in about 9 years in Q2, widening from $113.5 billion to $123.1 billion. Major pairs are little changed daily basis, ahead of the Fed's monetary policy meeting outcome this Wednesday. Much of dollar's fate will be sealed with the announcement, as despite no rate hikes are expected, speculative interest is pricing in news on how and when the Fed will unwind its balance sheet.
The short-term picture for the pair shows little directional strength ahead of the event, which will be the main market mover this Friday. The long term bullish trend remains firm in place, as the pair remains firmly above the daily ascendant trend line coming from April's lows, currently in the 1.1820 region, a level that can be tested on an extremely hawkish surprise from Yellen & Co. Shorter term, and according to the 4 hours chart, the pair presents a neutral-to-bullish stance, as the price holds above all of its moving averages, with the 20 SMA aiming to cross above the 100 SMA, but coming from a consolidative stage around it, whilst technical indicators head nowhere, right above their mid-lines. Stops are suspected above 1.2030, the immediate resistance, with a break above it favoring an advance towards the 1.2100 level.
Support levels: 1.1950 1.1910 1.1865
Resistance levels: 1.2030 1.2065 1.2100
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