It's amazing the ability of market's participant to come up with new terms to describe situations that can rock the boat in the financial world. After the Grexit, the Brexit and much more, we have now the "hawkish hold" used to describe the upcoming FED's economic policy announcement. Pretty much, the term is telling us that the market has no clue on what the US Central Bank will do this time.

Yellen's strong wording over the US economic conditions in her opening remarks at Jackson Hole, fueled hopes of a rate hike as soon as this September, later supported by the hawkish rhetoric of several policy makers. During the past week, however, Lael Brainard poured some cold water over the hike case, by asking for "prudence in the removal of policy accommodation."  She reminded speculators that FOMC´s officers are quite split in regards to the appropriate timing for the next rate hike.

Read: FXSurvey: Dovish Fed to hike interest rates in December, QE might return in the mid-term

The market bent back towards the greenback on Friday, following the release of US inflation data. According to official figures, the US CPI increased by 0.2% in August on a seasonally adjusted basis, and by 1.1% before seasonal adjustment over the last 12 months. The Core PCE index stands at 1.6%, while the unemployment rate at 4.9%, which means that if they want, the FED could raise rates this Wednesday. The problem is that none believe they would.

Hopes are now on a December hike, as chances of a rate hike after the elections are these days of over 50%. Still, markets are waiting for a hawkish stance from the FED to confirm it, and can rush back into de greenback with it, in spite of no action being taken.

EUR/USD technical outlook, levels to watch

From a technical point of view, and according to the daily chart, the pair maintains a neutral stance, with the downside slightly favored as the price seems unable to advance beyond its moving averages. As commented on a previous update, a huge trigger is needed to take the pair out of the 1.0840 and 1.1460 range, as with a couple of short-lived exceptions, the pair has been stuck between those two levels since the beginning of 2015. And the FED won't be enough, doesn't matter how hawkish it could be, unless they actually raise rates. That will be an "all hell breaks loose" scenario that will keep traders entertained for more than a couple of sessions.

As for the levels to watch, 1.1120, August 31st low is the immediate support, with a break below it exposing a long-term daily ascendant trend line coming from 1.0505, around 1.1060. Below this last, the pair can shed additional 100 pips, and test the 1.0940/60 region.

The immediate resistance comes at 1.1200, followed by the 1.1280 region, where the pair has a daily descendant trend line coming from 1.1615, this year high that has rejected advances since early August. Beyond this last, 1.1365, August monthly high is the next resistance, followed by a major static level around 1.1460.

View live chart of the EUR/USD

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD bears trying hard to keep reins below 0.7000, US/China inflation eyed

AUD/USD bears trying hard to keep reins below 0.7000, US/China inflation eyed

AUD/USD remains depressed around the intraday low near 0.6955 as sellers keep reins for the second consecutive day ahead of the key US inflation data. Firmer China CPI may offer intermediate help but US inflation is crucial amid strong jobs report, hawkish Fedspeak.

AUD/USD News

EUR/USD struggles to defend 1.0200 as sour sentiment teases DXY bulls ahead of US inflation

EUR/USD struggles to defend 1.0200 as sour sentiment teases DXY bulls ahead of US inflation

EUR/USD fades the corrective pullback from 1.0202 around 1.0215 as traders turn cautious ahead of the key US CPI during the initial hour of Wednesday’s Asian session. Also exerting downside pressure on the major currency pair are the economic fears surrounding the Eurozone.

EUR/USD News

Gold aims to recapture $1,800 as investors trim US Inflation forecasts

Gold aims to recapture $1,800 as investors trim US Inflation forecasts

Gold price is displaying a volatility contraction after printing a fresh monthly high at around $1,800.00 on Tuesday. The precious metal witnessed a decent north-side move on Tuesday and later on turned sideways ahead of US CPI.

Gold News

Crypto Sleeping Giants: Hedera Hashgraph price could shock the world

Crypto Sleeping Giants: Hedera Hashgraph price could shock the world

HBAR price shows a drop in volume amidst the current downtrend. Hedera Hashgraph has the potential to rally towards 2000%. Traders should keep the smart contract alternative token on their watchlists and consider a dollar cost average approach for investing. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures