- Heavily sold-off into broad US dollar strength, as monetary policy divergence is back in the spotlight.
- Upbeat US data, Fed’s monetary policy report to open downside towards the 1.1530 support area.
Following a brief phase of downside consolidation in Asia, EUR/USD came under heavy selling pressure in the European session, as the US dollar buying remains unabated heading towards the US macro updates and Fed’s semi-annual monetary policy (MonPol) report.
The divergent monetary policy outlooks between the Fed and ECB is back in play after yesterday’s Fed Chair Powell’s upbeat remarks on the US economy suggested that the Fed remains on track on its tightening path, remaining less concerned over the US-China trade row. Meanwhile, the ECB policymakers have clearly hinted on a rate hike, not until the summer of 2019.
More so, in terms of technicals, the spot has breached the key 20-DMA support at 1.1652 region that it managed to hold a day before, calling for further downside on the cards. A breach of the 1.1600 level could accelerate declines towards a test of the June-end lows of 1.1527.
In the day ahead, the pair will continue to track the USD price-action until the releases of the US import prices and Prelim UoM consumer sentiment data. However, the US macro news will play a second fiddle to the Fed’s MonPol report due to be published at 1500 GMT.
EUR/USD Technical Levels
Jason Sen at DayTradeIdeas.com, noted: “EURUSD holding minor support at 1.1660/55 as we take a breath but further losses are likely for 1.1630/25 then 1.1585/80. A retest of 1.1510/00 would not be a surprise. Gains are likely to be limited with minor resistance at 1.1690/99 & stronger resistance at 1.1725/30. Shorts need stops above 1.1765.”
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.