EUR/USD Forecast: Optimistic but cautious Fed hit the greenback

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1842

US Federal Reserve chief Powell was optimistic but cautious, with no details on tapering.
US policymakers continue to discuss some tapering details, but not there yet.
EUR/USD is higher in range, could extend gains towards 1.1920

The EUR/USD pair seesawed around the 1.1800 figure through the first half of the day, as investors await the Federal Reserve. Powell & Co finally made their appearance in the American afternoon, and, as widely anticipated, they left rates and the financial support programs unchanged. However, the statement was more optimistic than anticipated as it showed that "the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings." Powell was also cautious, and about tapering, he noted that policymakers discussed some details but that it will take a few more meetings to get into it.

Earlier in the day, Germany published the GFK survey, which printed at -0.3 in August, worse than expected. The US June Goods Trade Balance posted a deficit of $91.2 billion, according to preliminary estimates. On Thursday, the EU will publish the June Economic Sentiment Indicator, foreseen at 118.5 from 117.9 previously, while Germany will unveil July inflation figures. The US will release the preliminary estimate of the Q2 Gross Domestic Product, foreseen at 8.6% from 6.4% in the first quarter.

EUR/USD short-term technical outlook

The EUR/USD pair fell to 1.1771 post-Fed but bounced back. It is currently trading near a fresh weekly high of 1.1845. The 4-hour chart shows that the pair is developing above its 20 and 100 SMAs, with the shorter one heading higher below the longer ones. Technical indicators turned higher, maintaining their bullish slopes but below their weekly highs. The advance could continue towards the 1.1920 price zone, a strong static resistance level.

Support levels: 1.1795 1.1750 1.1705

Resistance levels: 1.1885 1.1920 1.1960

View Live Chart for the EUR/USD

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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.

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