Market Overview

Bulls Are feeling More Confident On Trade EURUSD, The Fed, And Brexit Hopes

  • EUR/USD hit the highest levels in nearly two weeks on the Fed's dovishness and optimism on trade.
  • The FOMC Meeting Minutes stand out as traders also eye trade and Brexit news.
  • The technical picture is improving for the pair.

EUR/USD is consolidating just below 1.1350 after hitting a high of 1.1358, the highest since February 7th.

Fed optimism: The Cleveland Fed President Loretta Mester, a known hawk, expressed a dovish stance on Tuesday. Speaking in Delaware, she not only supported the recent decision to pause the rate hike cycle but also opened the door to ending the balance sheet reduction program this year. Lower interest rates and more dollars to run around the world weakened the greenback.

We will learn more about the intentions of the Federal Reserve later on. The FOMC Meeting Minutes will shed more light on the January decision in which the Fed made a substantial dovish shift. Markets will try to understand if the world's most powerful central bank is done with rate hikes this year and how serious it is regarding the balance sheet reduction program.

The media lockup for the Minutes has been canceled due to bad weather in Washington DC. This means that the headlines will not come out immediately, as journalists will not receive time to read the report and prepare the stories. This could result in jitters.

Trade: On the trade front, the US has reportedly asked China to maintain a "stable" currency, or a stronger one. The Chinese yuan extended its gains against the greenback, in what seems like a gesture from China to the US. The weakness of the dollar against the yuan is also felt against the euro. Also, this is a sign of progress that also helps improve the mood and helps the common currency.

Another source of optimism comes from Brexit. UK PM Theresa May is traveling to Brussels today to meet European Commission President Jean-Claude Juncker. Downing 10 labeled the meeting as "significant," raising hopes for a breakthrough. The pound rose and also helped the common currency.

All in all, the better market mood pushes the USD lower and the euro higher.

EUR/USD Technical Analysis


EUR/USD set another higher high at 1.1358 and another higher low at 1.1275, a bullish sign. Momentum on the four-hour chart is also positive and the pair settled above the 50 Simple Moving Average which comes out at 1.1305 at the time of writing. 

Above 1.1358, resistance awaits at 1.1405 which was a swing low in late January. Further resistance is at 1.1450 which capped the pair twice around the same time. 1.1490 was a swing low in early February.

Support awaits around 1.1310 which held EUR/USD down last week. 1.1275 was the low point on Tuesday, and 1.1250 was a low point twice last week. The 2019 low at 1.1235 is next and followed by 1.1215 which was the low point in 2018.

Posted-In: BrexitNews Eurozone Forex Global Federal Reserve Markets General


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