EUR/USD Forecast: Trump-ed up but looking overbought

The EUR/USD is trading above 1.15, pushed up by Trump's comments.
The ECB's dovishness and trade could limit the upside.
The charts show slightly overbought conditions for the pair.

Yohay Elam FXStreet

The EUR/USD is trading above 1.1500, significantly higher than in Monday's morning trade but below the fresh highs of 1.1542. US President Donald Trump sent the US Dollar down by commenting on the Fed's policy once again. He criticized the central bank for raising rates and said he will continue doing so. He expressed his disappointment that Powell is not a "cheap money man" and criticized the EU and China for manipulating their currencies.

The US Dollar reacted with a downfall that extended beyond the immediate impact. Will the Fed react and move to a more dovish policy? Or will they fiercely defend their independence? Markets are still trying to make up their minds, and this may explain the hesitance of the pair to the upside.

Another reason for the current consolidation is the expectation that the European Central Bank's Meeting Minutes, coming out on Thursday, will remain dovish. In the recent meeting, President Mario Draghi clarified that the Bank will not raise rates before September 2019. It will be interesting to hear their tone about trade relations.

Another factor that causes concern is the global trade. While China and the US are talking, the US is still moving forward with levies worth $16 billion of Chinese goods. There are no indications that the this has been frozen.

On Monday, Germany's central bank, the Bundesbank, said it expects slightly slower growth for Q3 after a robust Q2. There are no market-moving events planned for today.

EUR/USD Technical Analysis

The EUR/USD broke above the uptrend channel, a bullish sign. In addition, Momentum is looking robust and the pair made a decisive break above the 50 Simple Moving Average on the four-hour chart. On the other hand, the Relative Strength Index (RSI) is above 70, indicating overbought conditions.

1.1545 is the recent high and the first line of resistance. 1.1575 supported the pair when it traded on the higher ground early in the month. 1.1620 was a stubborn cap around that period as well.

1.1508 serves as support after serving as the 2018 low for quite some time. 1.1445 capped the pair on a recovery attempt on Monday. 1.1365 was the initial low before the pair set the current 2018 trough at 1.1300.

More: EUR/USD well supported after the surge but resistance is close – Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.