EUR/USD jumps above 1.05 on Fed’s ‘recursive backtracking’

Omkar Godbole FXStreet Contributor

Offered tone around USD gathered pace in Asia, pushing the EUR/USD pair to a session high of 1.0540 on signs the Fed is backtracking from its hawkish view in December.

Strong dollar is a risk - Fed minutes

Fed minutes released in the overnight trade showed the policymakers are worried about the disinflationary impact of the strong US dollar. Furthermore, the minutes also revealed that many policy makers have assumed ‘Trump would walk the talk’ - tax cuts, fiscal stimulus.

This is a risky gamble, which also suggests the Fed would not mind delaying the next rate hike if Trump under delivers.

Moreover, the minutes appear to have set-in motion the ‘recursive backtracking’ from the December’s hawkish view. Similar backtracking was seen post the December 2015 rate hike as well.

EUR/USD Technical Levels

The spot was last seen trading around 1.0520. A break above 1.0552 (Nov 30 low) would open the door to 1.06 (zero figure) and then to 1.0657 (50-DMA). On the other hand, a failure to hold above 1.05 (zero figure) would shift risk in favor of a drop to 1.0464 (10-DMA) and 1.04 (Dec 16 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	High
1H	Bullish	Neutral	High
4H	Bearish	Neutral	Shrinking
1D	Slightly Bullish	Overbought	Low
1W	Bearish	Overbought	High
Updated Jan 4, 00:00 GMT

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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