Fundamentals:
EUR/USD ended the week at 1.17200 under the shadow of the political jitters. Powell “lights the fire” by stating that “with a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC believes that – for now – the best way forward is to keep gradually raising the federal funds rate.” who is testifying before the Congress. EUR/USD dropped and ended up at 3-week low of 1.1574.
And Trump got up on the stage. In an interview, he criticized FED. He said that ” we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time, I’m letting them do what they feel is best.” Dollar sell-off began. Immediately
Additionally, Trump revived trade war concerns by the end of the week, stating that “I’m ready to go to 500”
Considering that Trump has no control over the FED, it is likely the markets will re-focus on the macroeconomic data soon.
Upcoming week, Thursday and Fridays will be the most interesting days. Thursday ECB will have their monetary policy meeting and Friday the US will release Q2 preliminary GDP and PCE inflation. But for now, it is likely the “Trump Volatility ” will be over the markets.
Technically:
On the weekly chart, EUR/USD made a bullish candle with a lower low and lower high. Far below MA 20. It’s a clear bearish trend.
On the daily chart, the pair ended the week below the EMA 50 but in the upper Bolinger Band® over MA20. RSI headed North.
The pair has been stuck between 1.17000 and 1.16000 without a clear break.
On the H4 Chart, technical indicators turned to Bullish. However, as said, upward momentum is limited on the bigger chart timeframes. The shorter term Bearish trend will not change as long as the pair holds below 1.18500.
Levels to watch:
Upside: Above 1.17200, minor resistance is at 1.17560 and major resistance is at 1.17900. If the pair breaks above 1.17900, it is likely to test 1.18500.
Downside: 1.16900 and 1.16500 will be the targets if EURUSD makes a few Hourly closing below 1.17200.
We will have a high volume of volatility, however, it seems that the markets are still pricing in more rate hikes in the US and a dovish stance from the ECB.
This analysis prepared by the global analysts of Chartreaderpro.com and published on Investing.com. Commercial distribution is strictly prohibited.
