We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Bitcoin
Bearish
More View more
Real Time News
  • "What once seemed to be blue skies appears to have been more a fickle moment of respite as the Euro now finds itself under the dark clouds of a looming but familiar fundamental risk: a revived EU-US trade war". Stay tuned for the rest at 08:00 GMT. #WEF2020 #EURUSD
  • The $USD may fall against the Swedish Krona and Norwegian Krone if commentary from officials at the Davos forum uplift market mood and pressure haven-linked currencies. Get your market update from @ZabelinDimitri here:https://t.co/SZAG0yMu3d https://t.co/q3cJAKzWMp
  • LIVE NOW: In this session, Currency Analyst @ddubrovskyFX discusses traders' positioning as a key element of market analysis to determine the prevailing and future price trends. https://www.dailyfx.com/webinars/998956395
  • Will be starting shortly, join for a discussion on #CAD, #AUD, #EUR and #NZD revolving around how trader positioning can impact their trends ahead! https://t.co/R8RNxNqQed
  • Trump says at #WEF20 that the new tax cut plan will be revealed in 90 days - The Hill
  • LIVE IN 30 MIN: In this session, Currency Analyst @ddubrovskyFX discusses traders' positioning as a key element of market analysis to determine the prevailing and future price trends. https://www.dailyfx.com/webinars/998956395
  • The #Euro has been out of the spotlight at the start of the year thanks to the US-China trade war Phase 1 deal, US-Iranian geopolitical tensions, the Brexit deadline, and now, the Chinese coronavirus.Get your market update from @CVecchioFX here:https://t.co/WT3kZjBU8S https://t.co/57qRPYoUAd
  • The British Pound may extend its rally after an upbeat UK jobs report on GBP/USD technical signals. The anti-risk Japanese Yen rose as the China virus sunk stocks around the world $GBPUSD #Yen #ChinaVirus - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/01/22/GBPUSD-Rate-May-Rise-Yen-Gains-as-China-Virus-Sinks-Stocks.html?CHID=9&QPID=917702 https://t.co/vXL9pyM88O
  • Join @ddubrovskyFX 's #webinar at 8:00 PM ET/1:00 AM GMT to find out what information you can gain from knowing what other traders are buying or selling. Register here: https://t.co/Bb3CTCTm44 https://t.co/X1MUr6B3JR
  • RT @FactSet: 8 of 11 $SPX sectors are reporting a year-over-year decline in net profit margins in Q4. https://t.co/r5Kt2kmUKC https://t.co/…
EURUSD Rate Breakout Undermined by Dovish ECB Forward Guidance

EURUSD Rate Breakout Undermined by Dovish ECB Forward Guidance

2019-06-19 06:30:00
David Song, Currency Strategist
Share:

EUR/USD Rate Talking Points

EURUSD struggles to hold its ground as European Central Bank (ECB) President Mario Draghi endorses dovish forward guidance for monetary policy, but the Federal Reserve interest rate decision may keep the exchange rate afloat if the central bank shows a greater willingness to switch gears over the coming months.

EURUSD Rate Breakout Undermined by Dovish ECB Forward Guidance

EURUSD slips to a fresh weekly-low (1.1181) as ECB President Draghi strikes a caution tone and insists that “in the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.

The comments suggest the Governing Council will keep the door open to further insulate the monetary union as “further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools.” ECB officials may ultimately deploy more non-standard measures even though the central bank prepares to launch another round of Targeted Long-Term Refinance Operations (TLTRO) in September.

Image of european central bank interest rates

It remains to be seen if the ECB will implement a negative interest rate policy (NIRP) for the Main Refinance Rate, its flagship benchmark for borrowing costs, or reestablish its quantitative easing (QE) program as the central bank struggles to achieve its one and only mandate for price stability. The renewed pledge to support the Euro area economy may keep EURUSD under pressure as the Federal Reserve is expected to keep the benchmark interest rate in its current range of 2.25% to 2.50%.

However, the shift in trade policy may push the FOMC to alter the forward guidance for monetary policy especially as the Trump administration relies on tariffs and sanctions to push its agenda. In turn, updates to the Summary of Economic Projections (SEP) may produce headwinds for the US Dollar should Fed officials forecast a lower trajectory for the benchmark interest rate.

Image of Fed fund futures

To that end, Fed Fund futures may continue to reflect a greater than 90% probability for September rate cut, with EURUSD at risk of exhibiting a more bullish behavior over the coming days as the exchange rate breaks out of the downward trend from earlier this year.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups surrounding foreign exchange markets.

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.
  • With that said, EURUSD stands at risk for a larger correction as the exchange rate clears the April-high (1.1324) after failing to test the 1.1000 (78.6% expansion) handle.
  • Need a move back above the 1.1270 (50% expansion) to 1.1290 (61.8% expansion) region to spur a run at the monthly-high (1.1348), with a close above the 1.1340 (38.2% expansion) bringing the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region on the radar.
  • However, lack of momentum to hold above the 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement) region raises the risk for a move back towards 1.1140 (78.6% expansion).

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

DISCLOSURES

News & Analysis at your fingertips.