EUR/USD hits weekly highs near 1.1450 ahead of Fed’s decision

EUR/USD extends gains and reaches the highest level since December 10.
While the US dollar is moving mixed across the board, the euro remains strong on the back of the Italian budget agreement.

Matías Salord FXStreet

The EUR/USD pair rose further and climbed to 1.1438, hitting a fresh weekly high. It is trading near the top with the bullish tone intact but still under the key resistance seen around 1.1445/50.

The move to the upside took place as market participants await the outcome of the 2-day FOMC meeting. A rate hike is priced in, but lately, speculations about a “dovish” tone from the Fed weakened the demand for the US dollar. The statement will be released at 19:00 GMT.

Analysts at ING, also expect a rate hike today and they point out the economy is booming, inflation is at or above the 2% target and the jobs market is finally generating wage pressures. However, they warn that the outlook for policy in 2019 is more uncertain. “Back in September the Federal Reserve ‘dot diagram’, which shows the individual predictions of FOMC members, pointed to a median expectation of three 25bp rate rises next year with a further 25bp hike in 2020. Market participants are increasingly sceptical of this with Fed funds futures contracts no longer even fully pricing in one hike in 2019.”

The euro is among the top performers today, supported by the possible agreement between the Italian government and the European Commission that triggered a rally in Italian bonds. While EUR/USD is up almost more than 50 pips, EUR/CHF trades at 2-week highs near 1.1350 and EUR/GBP above 0.9030 at the highest since December 12.

EUR/USD Levels to watch

To the upside, the critical resistance level is seen at 1.1445/50, followed by 1.1470/75 (Nov 20 high) and 1.1495/1.1500 (Nov 7 high). On the flip side, support might now be seen at 1.1400, 1.1355/60 (Dec 17 high) and 1.1330 (Dec 13 low).

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD weakens to two-week lows near 1.3520

GBP/USD trades on the back foot, returning to the low 1.3500s, or two-week troughs, on Tuesday. Cable’s bearish price action follows decent gains in the Greenback at the time when investors assess latest US data releases and the persistent uncertainty in the US-Iran crisis.

EUR/USD remains offered; breaks below 1.1600

EUR/USD now accelerates its daily correction, breaching below the key 1.1600 support level on Tuesday. The pair’s daily correction comes on the back of a decent bounce in the US Dollar despite disappointing US data releases and amid persistent geopolitical concerns.

Gold flirts with multi-week lows near $4,300

Gold accelerates its correction and recedes toward the key $4,300 mark per troy ounce on Tuesday. The yellow metal’s persistent decline comes in response to the solid performance of the US Dollar and a sharp move higher in US Treasury yields across the curve.

Bitcoin and Gold Outlook: Bitcoin broadly consolidates, Gold falls as US JOLTS Job Openings rise

Bitcoin (BTC) maintains sideways trading around the immediate $78,000 support on Tuesday. The Crypto King outlook shows signs of cooling after the recent rally above $81,000. However, its downside remains protected, with major moving averages providing support and steady capital inflows absorbing some selling pressure.

Global bond market sell off haunts markets

Global sovereign bonds are selling off as we start a new month. The UK is, unsurprisingly, taking the biggest hit. Two and 10-year yields rose by 10 basis points at one point on Tuesday, and are currently higher by 7 and 8bps respectively.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.