EUR/USD analysis: Trump vs. the Fed triggered a dollar sell-off
|EUR/USD Current price: 1.1654
- US weekly unemployment claims down to their lowest since September 1969.
- US President Trump said Fed's hikes could disrupt the economic recovery.
The EUR/USD pair fell to 1.1574, with the dollar strengthening all across the board until mid-US afternoon, when US President Trump confronted Fed's decision in a televised interview, detonating a dollar's sell-off that sent the pair into the green p to 1.1677. There were no macroeconomic releases in Europe, yet the pair broke below the 1.1600 level during the London session, as demand for the American currency was exacerbated by weakness in the Pound and commodity-linked currencies. The US released some minor reports that fueled the decline by resulting better than expected. For the week ending July 14, initial claims resulted at 207,000, its lowest level since December 1969, while the Philadelphia Fed Manufacturing Survey for July came in at 25.7, surpassing the 22.0 expected and the previous 19.9, indicating a strong expansion in regional manufacturing activity.
US President Trump said that he is not thrilled about Fed's decision, as "we go up and every time you go up they want to raise rates again. I don't really — I am not happy about it. But at the same time, I’m letting them do what they feel is best.” And while Trump has no power over the Fed, which most likely stick to its tightening path, the news shook dollar bulls' conviction. There are no relevant macroeconomic releases scheduled for these two economies this Friday, as the EU will only release May current account data.
The 4 hours chart for the pair shows that the Trump-triggered rally stalled around a congestion of moving averages, while, despite bouncing from near oversold readings, the Momentum indicator remains below its mid-line as the RSI nears its 50 level, not enough to confirm additional gains ahead. The pair would need to break above 1.1825 to be able to extend its gains, with the 1.1720 being the next relevant resistance. Beyond this last, the pair will have more chances of extending gains Friday, while a retracement below the 1.1620, such chances will decrease.
Support levels: 1.1650 1.1620 1.1590
Resistance levels: 1.1685 1.1720 1.1755
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