|

EUR/USD Forecast: The Fed is going "loco"

EUR/USD Current price: 1.1542

  • US President Trump stole the show ahead of CPI release.
  • US Treasury yields sharply lower following Trump's comments.

"The Fed is going loco and there’s no reason for them to do it. I’m not happy about it.” That ’s what US President Trump said late Wednesday in an interview, following Wall Street's worst day since February, with the DJIA plummeting over 800 points. Of course, he was referring to the Fed's determination to keep on rising rates, as much of equities rout was a consequence of soaring Treasury yields. The greenback fell during Asian trading hours following his comments, with the EUR/USD pair extending its advance up to 1.1572, as government bond yields pulled further lower from the multi-year highs reached this week. The yields for the benchmark 10-year note is currently at around 3.15%, down from 3.21%, while for the 2-year note, the yield is down to 2.83% after reaching 2.90%.

The pair pulled back from the mentioned high and hover around 1.1540 early Europe, as local share markets gapped lower, following Wall Street's collapse, trading dip into the red although off their early lows. US futures, in the meantime, extend their slumps, with the DJIA now over 300 points below Wednesday's close.

Later today, the US will release inflation data for September, usually watched for clues ahead of Fed's next decision. However, seems Mr. Trump has already stolen the show ahead of the event. Furthermore, the Fed has already anticipated a fourth rate hike for December and seems unlikely today's release could change the picture. Anyway, US CPI is expected to have risen 2.4% YoY while the core reading is foreseen at 2.3%, this last, above the previous estimate of 2.2%.

The pair hit the 38.2% retracement of the 1.1797/1.1431 daily decline when reaching its daily high, now holding mid-way between it and the 23.6% retracement of the same decline at around 1.1520, the immediate support. In the 4 hours chart, the pair has moved above a now modestly bullish 20 SMA, while still developing below the 100 and 200 SMA, both around 1.1600/20. Technical indicators in the mentioned chart have stabilized near their recent highs, aiming to resume their advances, all of which leans the risk to the upside.

Support levels: 1.1460 1.1425 1.1390  

Resistance levels: 1.1570 1.1610 1.1645

View Live chart for the EUR/USD

Author

Valeria Bednarik

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.

More from Valeria Bednarik
Share:

Editor's Picks

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD softens to near 1.3600 as BoE hints further rate cuts

The GBP/USD pair loses ground to near 1.3610 during the early Asian session on Monday. The Pound Sterling softens against the Greenback amid growing expectations of the Bank of England’s interest-rate cut. Traders will take more cues from the Fedspeak later on Monday.

Gold eyes acceptance above $5,000, kicking off a big week

Gold is consolidating the latest uptick at around the $5,000 mark, with buyers gathering pace for a sustained uptrend as a critical week kicks off. All eyes remain on the delayed Nonfarm Payrolls and Consumer Price Index data from the United States due on Wednesday and Friday, respectively.

Top Crypto Gainers: Aster, Decred, and Kaspa rise as selling pressure wanes

Altcoins such as Aster, Decred, and Kaspa are leading the broader cryptocurrency market recovery over the last 24 hours, as Bitcoin holds above $70,000 on Monday, up from the $60,000 dip on Thursday.

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.