EUR/USD: Stuck in a range, the odds of an aggressive Fed rate cut drop


  • EUR/USD is trapped in a 100-pip range since July 9.
  • Markets have priced out prospects of an aggressive Fed easing.
  • ECB is expected to send out a strong dovish signal on Thursday.

EUR/USD continues to trade a narrow range amid falling odds of an aggressive easing by the US Federal Reserve (Fed) later this month.

As of writing, the pair is mildly bid at 1.1218. The spot has been restricted largely to a 100-pip range of 1.1190-1.1290 since July 9.

The pair fell 0.5% on Friday as the difference between the yield on the US and German 10-year government bond yield rose by five basis points to 238 basis points.

The yield spread rose in a USD-positive manner, as markets scaled back expectations of a 50 basis point Fed rate cut on July 31 after the New York Fed President John Williams walked back on his dovish comments by saying his speech was not about potential policy action at the upcoming meeting.

Fed watchers had priced in the possibility of the Fed reducing rates by a half-point on Thursday following comments by Williams that the Fed should “take swift action when faced with adverse economic conditions."

With market pricing out the odds of aggressive Fed easing, the probability of the EUR/USD pair ending the range-bound trading with a break below 1.1190 appears high.

A range breakdown also looks likely as the narrative that the European Central Bank (ECB) will cut the deposit rate by 10 basis points this year and restart the quantitative easing program is becoming entrenched in the markets.

The ECB is widely expected to keep rates unchanged, but send out a strong dovish message later this week. As for today, the pair may take cues from the Bundesbank's monthly economic report and the yield differential.

Technical Levels

EUR/USD

Overview
Today last price 1.1218
Today Daily Change -0.0004
Today Daily Change % -0.04
Today daily open 1.1222
 
Trends
Daily SMA20 1.1282
Daily SMA50 1.1246
Daily SMA100 1.1249
Daily SMA200 1.1318
Levels
Previous Daily High 1.1284
Previous Daily Low 1.1203
Previous Weekly High 1.1286
Previous Weekly Low 1.12
Previous Monthly High 1.1414
Previous Monthly Low 1.116
Daily Fibonacci 38.2% 1.1234
Daily Fibonacci 61.8% 1.1253
Daily Pivot Point S1 1.1189
Daily Pivot Point S2 1.1156
Daily Pivot Point S3 1.1109
Daily Pivot Point R1 1.1269
Daily Pivot Point R2 1.1316
Daily Pivot Point R3 1.1349

 

 

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.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD extends gains toward 1.31 after upbeat UK wage figures

GBP/USD is extending its gains and advancing toward 1.31 after UK wage figures beat expectations with 3.2% annually. The unemployment rate remained at 3.8% in November. 

GBP/USD News

EUR/USD recaptures 1.11 amid upbeat German figures, USD weakness

EUR/USD is trading above 1.11 after the German ZEW Economic Sentiment beat with 26.7 points. Presidents Trump and Macron agreed not to slap tariffs on each others' countries. The US dollar is retreating.

EUR/USD News

Market delays the trip to the moon

The crypto markets continue to turn to a new bullish phase. This turnaround began at the beginning of the year after a consolidation phase that started in mid-2019. 

Read more

Gold retreats from 2-week tops, drifts into negative territory

Gold failed to capitalize on its early uptick to near two-week tops and dropped to fresh session lows, around the $1560 region in the last hour.

Gold News

USD/JPY: Weaker near 110.00 amid China virus fears, BOJ's status-quo

The Japanese yen retains the bid tone following the Bank of Japan's (BOJ) status-quo, keeping USD/JPY under pressure near the 110 level amid risk-off market profile. S&P 500 futures drop 0.40% while the US Treasury yields are down over 1.50%, as the sentiment is hit by the coronavirus outbreak. 

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures