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18 Sep 2019

EUR/USD consolidates daily losses as US Dollar rises after FOMC meeting

  • US Dollar about to end the day higher after FOMC meeting but far from the top. 
  • EUR/USD down for the day far from lows, holds above 1.1000. 

The EUR/USD pair bottomed during Fed’s Powell press conference at 1.1012 and then trimmed losses. Near the end of the American session is hovering around 1.1030, down 35 pips for the day. 

The pair extended losses after the FOMC meeting. The Federal Reserve as expected cut the Fed Funds rate by 25bps to 1.75-2.00%. Three members dissented, two against the cut, and another asked for a 50bps cut. Chairman Powell signaled central bank’s next move will depend on how the economy performs and how risks evolve. 

“We didn’t learn much from today's press release or press conference. The evolvement of the US economy and risk picture will determine how many more cuts will potentially follow. We still think the economy will slow more than what the Fed forecast (but don’t pencil in a recession). Therefore, we still see two more cuts down the road”, explained Nordea Market analysts. 

The greenback peaked after Powell but then pulled back trimming gains. Equity prices in Wall Street bounced sharply during the last hour and turned positive. US President Trump criticized Fed’s policy again. 

Technical outlook 

The EUR/USD pair fell to a daily low of 1.1013, bouncing just modestly from the level ahead of Wall Street’s close, still in the red for the day. 

The pair has not delivered an important breakthrough on Wednesday even with the volatility around the FOMC meeting, notes Valeria Bednarik, Chief Analysts at FXStreet. “The pair is again trading below its 20 and 100 SMA in the 4 hours chart but needs to break below 1.0980, the 61.8% retracement of the latest daily advance to actually turn bearish.”

According to her, the 200-SMA has contained advances and will likely continue to do so, currently around 1.1085. “Technical indicators in the mentioned chart remain neutral-to bearish, with the Momentum heading nowhere around its midline, and the RSI gaining downward traction around 45.”

Technical Levels 

 

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