EUR/USD Analysis: Fed’s decision to rock the boat

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1053

EU inflation revised modestly lower in August, to 0.1% MoM.
US Federal Reserve expected to cut rates by 25bps, give no hints on future moves.
EUR/USD technically neutral, dollar’s direction depending on Fed’s outcome.

The financial world is in wait-and-see mode ahead of the US Federal Reserve monetary policy decision, and the EUR/USD pair is no exception, trading within familiar levels. The pair eased from an Asian high at 1.1075, but found intraday buyers at 1.1036, now trading in the 1.1050 price zone. The pair eased following the release of August inflation for the EU, as it came in up by 0.1% monthly basis, below the expected 0.2%. Annual inflation was confirmed at 1.0%. The US has just released Housing Starts and Building Permits for August, up by 12.3% and 7.7% respectively, much better than the July outcome, although having no effect on prices.

The US Federal Reserve is set to cut rates by 25bps, without confirming further cuts ahead. Chief Powell has sustained a confident stance about the economy and suggested the rate cut was a “preventive” move, amid slowing growth abroad and persistent trade tensions. Meanwhile, US President Trump has been pressuring for the Fed to make a steeper cut to make the dollar more competitive, criticizing policymakers every time he has. Also, policymakers are divided on whether a 25 bps or 50 bps is needed. For sure, Powell will shed light on all of these issues, and therefore, set dollar’s direction.

EUR/USD short-term technical outlook

The EUR/USD pair is hovering around 1.1050, trapped between Fibonacci levels and lacking directional strength. In the 4 hours chart, the pair is currently above its 20 and 100 SMA, but below the 200 SMA, this last around 1.1090. The Momentum indicator in the mentioned chart heads marginally lower within negative ground, while the RSI indicator hovers around its midline, none of them hinting the upcoming direction.

Support levels: 1.1045 1.0980 1.0955

Resistance levels: 1.1085 1.1120 1.1160

View Live chart for the EUR/USD

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.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.