EUR/USD Forecast: Dollar down on worried Fed
EUR/USD Current Price: 1.1136
- A concerned Fed added pressure on the greenback, rate hikes out of the table
- Uncertainty around the US-China trade relationship kept investors in cautious mode.
- EUR/USD at weekly highs and short-term bullish ahead of ECB’s decision.
The EUR/USD pair reached a fresh multi-week high of 1.1144, up for the day amid dollar’s persistent weakness, and Fed’s conservative stance. Speculative interest has begun pricing in a delay in a US-China trade deal, while fearing the next round of tariffs scheduled for December 15, will come into effect as planned. Although both sides continue reaffirming they are close to an agreement, they are incapable of offering something material to work with. Furthermore, Chinese negotiators were said to want levies canceled as a pre-condition for continued negotiation of a trade deal.
The greenback eased despite November inflation came in slightly better than anticipated, up for the month 0.3% and by 2.1% when compared to November 2018. Underlying inflation remained above 2.% up by 2.3% YoY. The US Federal Reserve, in the meantime, announced its latest monetary policy decision, and as expected, policymakers kept rates on hold. The FOMC funds rate was left at 1.50%-1.75%, while the dot plot provided little of interest. The accompanying statement showed that policymakers would continue to monitor data for the economic outlook “including global developments and muted inflation pressures.” The dollar shed some additional ground with the news.
This Thursday is the ECB’s turn to announce what’s next with monetary. It will be the first meeting presided by Mrs. Christine Lagarde. There are little clues on what she will do, although she promised an in-depth review of the central bank’s policies.
EUR/USD short-term technical outlook
The EUR/USD pair is trading at around 1.1135 ahead of the Asian opening at levels last seen early in November. The pair is currently advancing above the 23.6% retracement of its October rally, which skews the risk to the upside. In the 4-hour chart, the pair is developing above all of its moving averages, which anyway are confined to a tight range and lack directional strength. Technical indicators have turned higher within positive levels, heading firmly north and suggesting additional gains ahead. The advance could continue toward October high at 1.1179.
Support levels: 1.1100 1.1065 1.1030
Resistance levels: 1.1145 1.1180 1.1210
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
