Wednesday, October 9, 2019

EUR/USD

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Fundamental Highlights

The Euro sold off yesterday despite the increasing odds of a Fed rate cut by the end of this month. Fed Chair Powell said that the Central Bank’s Balance Sheet, which it had been shrinking since August, will soon expand, leaving doors open for another interest rate cut this month. The probability of a 25 bps cut on October 30 jumped above 80% after his speech. However, traders still regard the greenback as the better-yielded currency, as the situation surrounding the European Currency is even worse. Moving forward, the focus will shift to today’s Fed minutes, the Single currency could find a short-term bounce, if the minutes show growing consensus among policymakers on the need of further easing. If not, then the sell-off will likely continue today towards the yearly lows.

Technical Analysis

The Single currency bulls found support at the 50-day moving average, as price is currently testing the recently broken support as a possible new resistance, 1.0965. If the resistance holds, then the Euro could roll over and take out the 50-day moving average, along with the 1.0941 support, to likely test the next support level, 1.0905. Or else, the bulls will take over in an attempt to push price higher towards the bearish trend line and the 1.10 strong resistance.

Support: 1.0941 / 1.0905
Resistance: 1.0965 / 1.10

Chart (H4)
EURUSD