The US Dollar sold off across the board on Friday after the Fed Vice Chairman Richard Clarida's dovish comments said that interest rates are nearing a neutral rate. Adding to this, the US President Donald Trump's optimistic trade-related comments, saying that the US may not have to impose further tariffs on China, further dented the greenback's safe-haven status. The anti-dollar flow helped the EUR/USD pair to extend its steady recovery from YTD lows and pushed through the 1.1400 handle, or over one-week tops.
The pair struggled to build on last week's strong up-move and traded with a mild negative bias on the first trading day of a crucial week for the Italian budget. Expectations that the EU could start the procedure to issue sanctions against the troubled country this Wednesday seemed holding investors back from placing any aggressive bets and might turn out to be one of the key factors leading to a lacklustre price action amid absent relevant market moving economic releases, either from the Euro-zone or the US.
Looking at the technical picture, the pair is retreating from one-month-old descending trend-channel resistance, also coinciding with 200-period SMA on the 4-hourly chart. Meanwhile, technical indicators on the mentioned chart are still holding comfortably in bullish territory and hence, any subsequent fall is likely to attract some fresh buying near the 1.1355-50 horizontal support. Failure to defend the said support might turn the pair vulnerable and is likely to accelerate the slide back towards testing sub-1.1300 level.
On the flip side, the mentioned confluence hurdle, currently near the 1.1420-25 region, might continue to hinder any positive momentum. However, a convincing break through the mentioned barrier will negate any near-term bearish bias and is likely to prompt some aggressive short-covering move, assisting the pair to aim back towards reclaiming the key 1.1500 psychological 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 clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.