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EUR/USD remains under pressure even as the Federal Open Market Committee (FOMC) keeps the benchmark interest rate on hold, and recent price action raises the risk for a run at the 2018-low (1.1508) as it carves a fresh series of lower highs & lows.

Despite the below-forecast print for U.S. Non-Farm Payrolls (NFP), signs of sticky wage growth paired with the downtick in the Unemployment Rate should keep Chairman Jerome Powell & Co. on course to further normalize monetary policy as ‘the Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term.’

Image of Fed Fund Futures

Keep in mind, Fed Fund Futures continue to reflect expectations for four rate-hikes in 2018, with market participants still looking for a move in both September and December, and the FOMC’s hiking-cycle may continue to foster a bearish outlook for EUR/USD especially as the European Central Bank (ECB) endorses a dovish forward-guidance for monetary policy. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

Image of EURUSD daily chart

Recent price action in EUR/USD raises the risk for a larger decline as it carves a series of lower highs & lows following the failed attempts to test the July-high (1.1791), and the exchange rate appears to be on its way to test the 1.1510 (38.2% expansion) region, which largely lines up with the June-low (1.1508).Need a break/close below the stated region to open up the downside targets for EUR/USD, with the first region of interest coming in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion) followed by the 1.1290 (61.8% expansion) hurdle.

For more in-depth analysis, check out the Q3 Forecast for the Euro

Additional Trading Resources

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Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.