The EUR/USD pair has been trading with a positive bias over the last couple of trading sessions. But the uncertainties surrounding Brexit and caution ahead of US Fed forward guidance had been limiting sharp gains until yesterday. Despite cautious investor sentiment, EURO had been trading with steady upward bias near mid 1.13 handle ahead of FOMC update. The pair saw a sharp upward price move post US FOMC update following Fed forward guidance which was dovish in nature and well in line with market expectations. The Feds had downgraded growth forecast for the year ahead and their forward guidance suggested that there were no rate hike plans for the year ahead.
US Dollar Under High Bearish Pressure Post FOMC Update
During their post-FOMC press conference, Powell stated that their current decision was based on the impact of ongoing geopolitical issues in the US economy. Powell also stated that the feds could hike or cut interest rates owing to the influence of slowdown in European & Chinese economies and Brexit proceedings on the US market. US macro data currently sends neural signals to Fed’s when considering rate hike plans and further decisions are likely to depend on future macro data updates. This caused the pair to see a sharp upward spike from mid-1.13 handle to mid-1.14 handle post which the pair saw consolidative price action. As of writing this article, the EURUSD pair is trading at 1.1423 up by 0.09% on the day.
Following, Fed’s dovish forward guidance update, the long term US Treasury yields dropped fresh yearly lows. This resulted in the spread difference between US & DE government bond yields shrinking further in favor of the common currency. This suggests that the EURO is likely to maintain its positive price action for the rest of the day, However, the EURO now faces strong resistance to the upside near the mid-1.14 handle as EURO is still pressured by Brexit woes which limits further gains. Moving forward, investors await macro data updates for short term profit opportunities. Expected support and resistance for the pair are at 1.1409, 1.1375, 1.1330 and 1.1460, 1.1495, 1.1520 respectively.
Please feel free to let us know what you think in the comments below.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Price of Gold Fundamental Daily Forecast – Dovish Fed Doesn’t Guarantee New Bull Market
- USD/JPY Fundamental Daily Forecast – Falling Treasury Yields Making Dollar Less-Attractive Investment
- EUR/USD Price Forecast – Euro Gains on Post FOMC USD Weakness
- European Equities: The DAX Pressures the Majors as Auto Stocks Crumble
- Natural Gas Price Fundamental Daily Forecast – Near-Term Cold May Hold Prices in Range
- The EU Summit: Can the Pound Move on from Brexit?