News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • USD strength present throughout the NY session, but the US Dollar Index continues to find stiff resistance at the 94 level $USD $DXY https://t.co/nZFjtFbG4O
  • Euro is down more than 0.2% against the US Dollar since the start of the week with EUR/USD trading just above support heading into the European Central Bank interest rate decision tomorrow. Get your $EURUSD market update from @MBForex here:https://t.co/a9tikztYFj https://t.co/uztfGSoYvW
  • Nasdaq 100 is not sure whether it wants to close at a record high, but the NDX-SPX ratio has jumped sharply today on the tech index's 0.9% rally https://t.co/fUMvv9mtZ8
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Gold: 0.33% Silver: 0.05% Oil - US Crude: -0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/1qRqMHuB6V
  • The recent AUD/JPY rally appears to be stalling below 86.000, with the pair relatively flat on the session $AUDJPY https://t.co/xfNKmmhJdq
  • #Euro Technical Forecast: $EURUSD Pressured into #ECB- Breakout Levels - https://t.co/RG2nfQrqsF https://t.co/ceYY2Dk1Eo
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.05%, while traders in USD/JPY are at opposite extremes with 73.98%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/j6NdfK7lpf
  • A day full of meetings and I've always had one eye fixed on this $GOOG rally. Last nights afterhours reticence didn't do this stock (and MSFT) justice. Impressive https://t.co/tEwaqSt5lm
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.29% US 500: 0.22% France 40: 0.19% Germany 30: 0.13% Wall Street: -0.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/aH5WxfeKWP
  • RT @DeItaone: *Natural Gas Jumps 4.3% to Session-High $6.134 Ahead of Contract Expiration
EURUSD Searches for Support as Fed Tames Bets for Rate Easing Cycle

EURUSD Searches for Support as Fed Tames Bets for Rate Easing Cycle

David Song, Strategist

EUR/USD Rate Talking Points

EURUSD trades to a fresh monthly low (1.1060) following the Federal Reserve interest rate decision, and the exchange rate may continue to search for support over the coming days as the US Non-Farm Payrolls (NFP) report is anticipated to highlight a robust labor market.

EURUSD Searches for Support as Fed Tames Bets for Rate Easing Cycle

EURUSD snaps the range bound price action from earlier this week even though the Federal Open Market Committee (FOMC) implements a 25bp reduction in the benchmark interest rate as the central bank tames speculation for a rate easing cycle.

It seems as though the FOMC is in no rush to reverse the four rate hikes from 2018 as Chairman Jerome Powell insists that the rate cut “is intended to insure against downside risks from weak global growth and trade policy uncertainty.”

The comments suggest the Fed will revert back to a wait-and-see approach as “the Committee still sees a favorable baseline outlook,” and updates to the US Non-Farm Payrolls (NFP) report may encourage Chairman Powell and Co. to strike a more balanced tone as the economy is anticipated to add another 165K jobs in July.

Image of Fed Fund futures

Little signs of a looming recession should push the FOMC to the sidelines, with Fed Fund futures now showing a greater than 40% probability that the FOMC will keep the benchmark interest rate in its current range of 2.25% to 2.50% at the next interest rate decision on September 18.

However, the Fed may come under increased pressure to adopt a more accommodative stance as President Donald Trump favors “a lengthy and aggressive rate-cutting cycle,” and it remains to be seen if the FOMC will further adjust the forward guidance for monetary policy as the central bank pledges to “act as appropriate to sustain the expansion.”

Nevertheless, waning expectations for back-to-back rate cuts may keep EURUSD under pressure, with recent price action raising the risk for a further decline in the exchange rate as it fails to preserve the range from earlier this week.

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
  • The reaction to the Fed rate cut brings the downside targets back on the radar for EURUSD as the exchange rate snaps the range-bound price action from earlier this week.
  • Recent developments in the Relative Strength Index (RSI) highlights a similar dynamic as the oscillator fails to retain the bullish formation from earlier this year.
  • The break/close below the 1.1100 (78.6% expansion) handle opens up the 1.1040 (61.8% expansion) region, with the next area of interest coming in around 1.0950 (100% expansion) to 1.0980 (78.6% retracement).
  • Will keep a close eye on the RSI as it approaches oversold territory, with a break below 30 raising the risk for a further decline in the exchange rate as the bearish momentum gathers pace.

For more in-depth analysis, check out the 3Q 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