The EUR/USD pair built on Friday's late rebound from over two-week lows and continued gaining positive traction on Tuesday, shrugging off the disappointing release of German Ifo business climate index for December. Meanwhile, news that Italy's government has reached an accord with the European Union on its controversial budget proposal remained supportive of the positive momentum, though failed to provide any strong boost.
The ongoing US Dollar retracement from 1-1/2 year tops set last Friday turned out to be one of the key factors driving the pair higher. Growing market expectations that the Fed might slow the pace, or even pause, its policy tightening cycle continued prompting dollar long-unwinding trade on Tuesday. Adding to this, the US President Donald Trump's verbal intervention on Fed policy further dented the already weaker sentiment and dragged the greenback to four-week lows.
The pair rallied to the 1.1400 handle, over one-week tops, but started retreating from highs and finally settled nearly 40-pips off daily swing high. The USD continued with its struggled through the Asian session on Wednesday and helped the pair to catch some fresh bids ahead of the impending FOMC policy decision, due to be announced later in the day.
The US central bank is widely expected to raise benchmark interest rates by 25 bps, fourth hike for this year, and hence, the key focus will be on updated economic projections, especially the so-called 'dot-plot'. The Fed's policy guidance for 2019 will play a key role in driving the near-term sentiment surrounding the buck and eventually provide some fresh directional impetus for the major.
From a technical perspective, the pair needs to decisively breakthrough 55-day SMA barrier to increase prospects for any further near-term appreciating move. The mentioned hurdle, currently near the 1.1400 mark, has been capping the pair since early-October and hence, should act as a key trigger for bullish traders. On a sustained move beyond the said handle, the pair is likely to surpass the 1.1430-40 intermediate resistance and aim towards reclaiming the key 1.1500 psychological mark.
On the flip side, the 1.1350-40 region now becomes immediate support to defend, which if broken might turn the pair vulnerable to slide back below the 1.1300 handle and aim towards the 1.1270-65 strong horizontal support, tested last week. A follow-through selling has the potential to continue dragging the pair further towards challenging yearly lows, around the 1.1215 region en-route the 1.1200 round figure mark.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD climbs to 10-day highs above 1.0700
EUR/USD gained traction and rose to its highest level in over a week above 1.0700 in the American session on Tuesday. The renewed US Dollar weakness following the disappointing PMI data helps the pair stretch higher.
GBP/USD extends recovery beyond 1.2400 on broad USD weakness
GBP/USD gathered bullish momentum and extended its daily rebound toward 1.2450 in the second half of the day. The US Dollar came under heavy selling pressure after weaker-than-forecast PMI data and fueled the pair's rally.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Here’s why Ondo price hit new ATH amid bearish market outlook Premium
Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.
Germany’s economic come back
Germany is the sick man of Europe no more. Thanks to its service sector, it now appears that it will exit recession, and the economic future could be bright. The PMI data for April surprised on the upside for Germany, led by the service sector.