EUR/USD headed for the upper border of the triangle. What now?
The Fed’s decision on Wednesday not to raise interest rates could lead to a weakening of the U.S. dollar in the longer term. It seems unlikely now that the Fed will raise interest rates as early as March, or even June.
The Fed’s language has also changed. It’s been saying in its growth forecasts that the economy would expand “strongly”. Now it is only talking of “solid” growth.
We will see the effects of those over the long-term, but what about the short term? Looking at the current economic figures, what outcomes could we expect?
Today, labour market data from the US is available at 1:30 p.m. GMT and by 3 p.m. GMT Manufacturing PMI also for the USA. This could mean volatility in the US dollar. There are intraday opportunities here.
As we expected, the EURUSD has headed for the upper limit of the triangle, which proved to be the first resistance. The MACD crossed its trigger line from bottom to top, and the histogram moved into positive territory.
The range around 1.145 is worth a closer look this week.
Towards the downside, the lower border of the triangle remains the most crucial support in the short term. If this is broken through to the downside, the next support is at the lows of the recent past, around 1.129.
On the way up, the upper boundary of the triangle must be breached. Shortly after that, a structural level from the monthly chart at 1.156 is waiting, which could offer first resistance. If this hurdle can be overcome sustainably, the path to 1.175 could be opened.
EUR/USD Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at its own risk.