• The USD fails to capitalize on the post-FOMC uptick and helped regain traction.
  • Bulls lacked any strong conviction despite narrowing US-German yield spread.

The US Dollar failed to capitalize on the post-FOMC positive move and helped the EUR/USD pair to regain some positive traction on Thursday. Despite the hawkish rate cut by the Fed, the US Treasury bond yields were back under pressure and turned out to be one of the key factors weighing on the greenback. The shared currency was further underpinned by the fact that France and Germany were reported to be working on a strategy to respond to a global economic slowdown.

Range play intact

Meanwhile, the buck showed little reaction to better-than-expected US economic data, showing that weekly jobless claims rose less-than-expected to 208K for the week ended September 13 and the Philly Fed Manufacturing Index for September came in at 12 as compared to consensus estimates pointing to a reading of 11. Finally, the US existing home sales jumped 1.3% in August, albeit failed to inspire the USD bulls. The pair recovered a major part of the overnight modest pullback but once again failed to make it through the 1.1075-80 supply zone.
The overnight late pullback lacked any obvious fundamental catalyst and narrowing German-US yield spread limit helped limit any further downside, rather assisted the pair to catch some fresh bids during the Asian session on Friday. Moving ahead, market participants now look forward to the release of the Euro-zone Consumer Confidence data for September in order to grab some short-term trading opportunities. From the US, the only scheduled speech by Boston Fed President Eric Rosengren might influence the USD price dynamics and further contribute towards providing some impetus on the last trading day of the week.

Short-term technical outlook

Barring a few knee-jerk moves, the pair has been oscillating well within a broader trading over the past two weeks or so and thus, warrant some caution before placing any aggressive directional bets. The technical outlook is likely to turn bullish if the pair manages to break through a near three-month-old descending trend-line resistance near the 1.1075-80 zone. Above the mentioned barrier, a fresh bout of short-covering has the potential to lift the pair beyond the 1.1100 round-figure mark, and the 1.1145 intermediate resistance, towards challenging 100-day SMA near the 1.1175-80 region en-route the 1.1200 handle.
On the flip side, the pair might continue to attract some dip-buying interest near the 1.1025-20 region, which is closely followed by the key 1.1000 psychological mark. Failure to defend the mentioned support levels might now turn the pair vulnerable to resume its prior/well-established bearish trend and accelerate the slide back towards challenging 2019 swing lows support near the 1.0925 region. The downward momentum could further get extended towards the 1.0900 handle before the pair eventually aims towards testing its next major support near the 1.0840-35 region.


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