EUR/USD analysis: dollar pressured ahead of Fed
EUR/USD Current price: 1.1355
- EUR´s advance limited by another batch of soft local data.
- USD lost ground on profit-taking ahead of US Federal Reserve monetary policy meeting.
The American dollar kick-started the week with a soft tone, losing ground against most of its major rivals. There was no particular catalyst for broad dollar's weakness but cautious ahead of the looming Fed's monetary policy meeting this Wednesday, as speculative interest fears the central bank will decide to announce a pause, or at least a slower pace in future rate hikes. Also, US President Trump renewed his criticism on the Fed's hawkish stance, tweeting "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike." The EUR/USD pair advanced up to 1.1357 with the dollar losing ground alongside Wall Street. EUR's limited advance was due to another round of disappointing local data, as, according to the official release, the Union's inflation fell in November, with the core monthly CPI declining 0.3%, and the annual reading up by 1.0% as expected, way below the ECB's target. The US released minor figures which also disappointed, as the NY Empire State Manufacturing Index for December printed 10.9, while the NAHB Housing Market Index for the same month came in at 56, both missing expectations and below the previous readings. This Tuesday, Germany will release the IFO Business Climate survey for December, expected to indicate further deterioration in sentiment, while the US will offer November Housing Starts and Building Permits.
The daily advance wasn't enough to put the pair en route for a firmer advance, as, in the 4 hours chart, it settled around its moving averages, which remain directionless and confined to a tight range. The Momentum indicator in the mentioned chart advances in neutral territory, while the RSI indicator turned flat around 54, indicating limited buying interest. The pair would need to accelerate through 1.1380 to be able to extend its gains up to the 1.1420/30 region, where short-term selling interest is expected to cap the advance. The risk will turn back south on a break below 1.1325, where multiple intraday lows from these last few days draw a static support.
Support levels: 1.1325 1.1290 1.1255
Resistance levels: 1.1380 1.1425 1.1460
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
