Never miss a story from David Song

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

EUR/USD continues pare the decline from the September-high (1.1815) as updates to the U.S. Consumer Price Index (CPI) highlight a diminishing threat for above-target inflation, and the exchange rate may stage a larger rebound over the coming days as it extends the bullish sequence from the monthly-low (1.1432).

Keep in mind, one dismal data print will do little to derail the Federal Reserve from its hiking-cycle as Chairman Jerome Powell & Co. largely achieve their dual mandate for full-employment and price stability, but signs of easing job/wage growth paired with the ongoing shift in trade policy may play a greater role in driving U.S. dollar price action as it curbs the central bank's ability to ramp up the normalization process.

In turn, Fed officials may continue to project longer-run interest rate of 2.75% to 3.00% at the next quarterly meeting in December, and it seems as though the Federal Open Market Committee (FOMC) will resist calls to quickly unload the bloated balance sheet especially as the International Monetary Fund (IMF) cuts its world growth forecast for the first time since 2016.

Image of fed fund futures

With that said, lackluster data prints coming out of the U.S. economy may continue fuel the recent rebound in EUR/USD even though Fed Fund Futures still reflect expectations for another 25bp rate-hike in 2018, and the recent series of higher highs & lows brings the topside targets back on the radar as the Relative Strength Index (RSI) highlights a similar dynamic and reverses course ahead of oversold territory. 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 ratdaily chart

Recent developments suggests EUR/USD will continue to track the broad range from August through September amid the failed attempt to test the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region, with the exchange rate quickly coming up against the Fibonacci overlap around 1.1640 (23.6% expansion) to 1.1680 (50% retracement). A break/close above the stated region raises the risk for another run at the 1.1810 (61.8% retracement) hurdle, which largely lines up with the September-high (1.1815).

For more in-depth analysis, check out the Q4 Forecast for the Euro

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

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.