EUR/USD posts fourth gain in-a-row; hits 1.1400 but holds below
|- The rally of EUR/USD goes on but it found an obstacle at 1.1400
- US Dollar remains under pressure on Fed rate cut expectations.
The EUR/USD pair reached 1.1400 earlier today for the first time since March 21st. It failed to break above and over the last hours it has been steadily moving in a small range between 1.1395 and 1.1385, consolidating daily gains.
The Euro heads for the fourth consecutive daily gain as it continues to rally versus the US Dollar. An improvement in EZ economic data and mainly the expectations about a rate cut from the Federal Reserve continue to be the key drivers of the pair. A large number of analysts changed EUR/USD forecasts after the FOMC meeting of last week.
“The Fed has blinked and rate cuts are coming from July. The Fed-ECB monetary policy divergence should pave the way for a higher EUR/USD over the coming six months, as Fed is likely to be more dovish than the ECB. On 1- 3M, Fed initiating an easing cycle will do most of the lifting, while on 3- 6M a US-China trade deal should weaken USD. We see EURUSD at 1.14, 1.15, 1.17 and 1.17 in respectively 1M, 3M, 6M and 12M”, wrote Danske Bank analysts.
Technical outlook
The 4-hour chart shows the pair still clearly bullish but the momentum eased significantly and Momentum started to move south. Still, the chart points to the upside and a breakout above 1.1400 could clear the way to more gains. The next resistance might be seen at 1.1420 and 1.1440.
If the euro continues to be unable to climb above 1.1400 a consolidation seems likely, increasing the odds of a profit-taking correction. The immediate support lies at 1.1370 followed by 1.1335 and 1.1315.
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