EUR/USD drops to 50-day SMA for first time since May as dollar rises

EUR/USD trades at the lowest level since mid-August.
The pair tests 50-day SMA support for the first time in five months.
The dollar draws bids as the Fed expects faster economic recovery.

Omkar Godbole FXStreet Contributor

EUR/USD is feeling the pull of gravity on Thursday, as the dollar gains altitude on Federal Reserve's positive comments on the economy.

The pair currently trades at the 50-day simple moving average support at 1.1742. The average has come into the play since May 25. Also, EUR/USD's current level was last seen on Aug. 12.

Fed upgrades language on economy

On Wednesday, the central bank said that it expects the US economic recovery from the coronavirus crisis to gather pace and foresees unemployment falling faster than the central bank expected in June. The bank kept rates pinned near zero and reiterated tolerance for high inflation, as expected.

The decision to upgrade the economic outlook put a floor under the greenback. EUR/USD faced rejection at 1.1883 after the Fed and has been falling ever since.

The European FX desks could join the dollar selling bandwagon, yielding a more profound decline in EUR/USD. However, the pair may defend the 50-day SMA support if the European Central Bank member De Guindos downplays the need for additional stimulus during his speech at 08:00 GMT. Markets will likely ignore the final Eurozone consumer price index for August, due at 09:00 GMT unless the data carries a significant upward or downward revision to preliminary forecasts.

The focus would shift to the US Initial Jobless Claims and the US housing data during the early North American trading hours.

Technical levels

EUR/USD

Overview
Today last price	1.1742
Today Daily Change	-0.0074
Today Daily Change %	-0.54
Today daily open	1.1816

Trends
Daily SMA20	1.1841
Daily SMA50	1.1742
Daily SMA100	1.142
Daily SMA200	1.1215

Levels
Previous Daily High	1.1883
Previous Daily Low	1.1788
Previous Weekly High	1.1918
Previous Weekly Low	1.1753
Previous Monthly High	1.1966
Previous Monthly Low	1.1696
Daily Fibonacci 38.2%	1.1824
Daily Fibonacci 61.8%	1.1846
Daily Pivot Point S1	1.1775
Daily Pivot Point S2	1.1734
Daily Pivot Point S3	1.168
Daily Pivot Point R1	1.187
Daily Pivot Point R2	1.1924
Daily Pivot Point R3	1.1964

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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