EUR/USD Forecast: Euro looks to extend uptrend as Fed dust settles
- EUR/USD gains traction and trades above 1.1150 on Thursday.
- The US Dollar stays under selling pressure following the key Fed event.
- Wall Street's main indexes remain on track to open decisively higher.
Following Wednesday's highly volatile action, EUR/USD gathers bullish momentum early Thursday and trades in positive territory above 1.1150. The US economic calendar will feature mid-tier macroeconomic data releases but the risk perception could drive the pair's action.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.80% | -1.04% | 1.40% | -0.38% | -1.85% | -1.61% | -0.22% | |
| EUR | 0.80% | -0.29% | 2.17% | 0.39% | -1.12% | -0.87% | 0.54% | |
| GBP | 1.04% | 0.29% | 2.38% | 0.68% | -0.83% | -0.60% | 0.84% | |
| JPY | -1.40% | -2.17% | -2.38% | -1.75% | -3.15% | -2.95% | -1.66% | |
| CAD | 0.38% | -0.39% | -0.68% | 1.75% | -1.56% | -1.24% | 0.05% | |
| AUD | 1.85% | 1.12% | 0.83% | 3.15% | 1.56% | 0.26% | 1.66% | |
| NZD | 1.61% | 0.87% | 0.60% | 2.95% | 1.24% | -0.26% | 1.42% | |
| CHF | 0.22% | -0.54% | -0.84% | 1.66% | -0.05% | -1.66% | -1.42% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The Federal Reserve (Fed) announced on Wednesday that it lowered the policy rate by 50 basis points (bps) to the range of 4.75%-5%. Markets were forecasting the Fed to cut the policy rate by 25 bps but there were growing expectations of a 50 bps cut. Nevertheless, the immediate market reaction triggered a US Dollar (USD) selloff and fuelled a leg higher in EUR/USD.
Meanwhile, the revised Summary of Economic Projections (SEP), the so-called dot-plot, showed that policymakers foresee two more 25 bps rate reductions in the last two meetings of the year. In the post-meeting press conference, Chairman Jerome Powell refrained from committing to another large rate reduction, adding that they could dial back the pace of cuts if the economy remains solid.
Although the USD managed to stage a rebound in the Fed aftermath, risk flows started to dominate the financial markets early Thursday, not allowing the currency to hold its ground. At the time of press, US stock index futures were up between 1% and 1.75%. A bullish opening, followed by a risk rally, in Wall Street's main indexes could further weigh on the USD and open the door for an extended rally in EUR/USD.
In the early American session, the US Department of Labor will publish the weekly Initial Jobless Claims data.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart rose slightly above 70, suggesting that EUR/USD's bullish bias remain intact, with a possibility of a technical correction in the near term.
On the upside, 1.1200 (static level, end-point of the uptrend) aligns as first resistance before 1.1275 (July 18, 2023, high) and 1.1300 (round level). Looking south, interim support could be spotted at 1.1130 (20-period Simple Moving Average) ahead of 1.1100 (Fibonacci 23.6% retracement) and 1.1080 (100-period Simple Moving Average).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
