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EURUSD Rate Targets March High as Trump Advocates Rate Cuts & Easing

EURUSD Rate Targets March High as Trump Advocates Rate Cuts & Easing

David Song, Strategist

The March-high (1.1448) remains on the radar for EURUSD following the Federal Reserve interest rate decision as the exchange rate breaks out of the downward trend from earlier this year.

The fresh updates from the Federal Open Market Committee (FOMC) suggest the central bank will insulate the economy from the shift in US trade policy as the “apparent progress on trade turned to greater uncertainty.” In turn, Chairman Jerome Powell and Co. may continue to alter the forward guidance for monetary policy as the Trump administration relies on tariffs and sanctions to push its agenda.

Image of fed fund futures

With that said, the US dollar stands at risk of facing a more bearish fate over the coming months as eight Fed officials project a lower trajectory for the benchmark interest rate while Fed Fund futures reflect a 100% probability for at least a 25bp reduction at the next decision on July 31.

It remains to be seen if the FOMC will reverse the four rate hikes from 2018 as President Donald Trump tweets “we need rates cuts, & easing,” but current market conditions are likely to keep EURUSD afloat as the FOMC appears to be on track to shift gears over the coming months.

EUR/USD Rate Daily Chart

Image of eurusd daily chart

Keep in mind, the broader outlook for EURUSD is no longer tilted to the downside as both price and the Relative Strength Index (RSI) break out of the bearish formations from earlier this year.

In turn, EURUSD stands at risk for a larger correction as it breaks out of the range-bound price action from May following the failed attempt to test the 1.1000 (78.6% expansion) handle, with the exchange rate trading above the 200-Day SMA (1.1350) for the first time since in over a year.

A closing price above the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region brings the Fibonacci overlap around 1.1430 (23.6% expansion) to 1.1450 (50% retracement) on the radar,which lines up with the March-high (1.1448), with the next area of interest coming in around 1.1510 (38.2% expansion) to 1.1520 (23.6% expansion).

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Additional Trading Resources

For more in-depth analysis, check out the 2Q 2019 Forecast for the Euro

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 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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