Date: 01 Feb 2019

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.

 

EURUSD Daily Chart | Source: ActivTrader

EUR/USD Daily Chart | Source: ActivTrader

 

Written by Daniel Schuetz, External Analyst

 

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