EUR/USD steadies, Trump fires Fed governor Lisa Cook
EUR/USD is holding steady near 1.16 after falling 0.8% in the previous session as investors ponder the credibility of the Federal Reserve after President Trump fired Federal Reserve Governor Lisa Cook.
Trump's announcement of Cook’s immediate removal from the Federal Reserve Board of Governors helped the EUR strengthen, picking up from yesterday’s lows.
EUR/USD fell sharply yesterday, giving back Friday's gains, following the dovish remarks from Federal Reserve chair Jerome Powell at the Jackson Hole symposium. The market is pricing in around 87% probability that the Fed will cut rates in September.
Before the September Fed meeting, two inflation reports will be released, including core PCE for July, which will be released on Friday, as well as the all-guest CPI index and the August nonfarm payroll report early next month.
Hotter than expected inflation reports and a recovery in the nonfarm payroll report could prevent the Fed from cutting rates.
Meanwhile, the EUR is supported by ECB–Fed divergence. While the Fed is weighing up when to cut rates again, the ECB is nearing the end of its rate-cutting cycle. The ECB is expected to leave rates unchanged in the next meeting.
However, the growth outlook remains weak. ECB President Christine Lagarde has warned over the growth outlook in the region, expecting Q3 GDP to slow.
Looking ahead, US durable goods and consumer confidence data are due. Weak data could pull USD lower.
EUR/USD forecast – technical analysis
EUR/USD longer-term uptrend remains intact for now. The price ran into resistance at 1.1830 and has been pulling back, but continues to find support from the 20 SMA around 1.16. The RSI is neutral.
Should the 20 SMA continue to hold, buyers will look to rise above 1.1650, the 50 SMAA ahead of a re-test of 1.17.
Sellers would need to break below 1.16 to open the door to 1.1570, the April high. Below here 1.15, the rising trendline support comes into play.
Oil eases after 2% gains yesterday.
Oil prices were lower on Tuesday after jumping almost 2% in the previous session, as traders continue to monitor developments in the Russia-Ukraine conflict.
Yesterday's gains were driven by concerns over supply disruption as Ukraine hit Russian energy infrastructure and as traders anticipate more U.S. sanctions on Russian oil.
President Trump renewed his threat to impose sanctions on Russia if there is no progress toward a peace deal in the next two weeks.
The market will also be monitoring the impact of US tariffs against India for its continued purchase of Russian oil. Indian exporters are bracing for disruptions after the US security confirmed that Washington imposed an additional 25% tariff on all Indian origin goods from Wednesday.
US crude oil inventory data will be released later today for further clues on the demand outlook after a steep draw last week.
Investors will also be monitoring U.S. economic data today including durable goods and consumer confidence, for clues over the health of the U.S. economy. Weaker data could fuel concerns over the growth outlook, pulling oil prices lower.
Oil forecast – technical analysis
Oil is bearish below 70.00; it trades below its falling trendline, 200, 50, and 20 SMA. The price recently recovered from the 61.50 low but ran into resistance at 64.50, the 20 SMA.
Sellers will look to take out support at 61.50 and 60.00 to extend losses towards 55.50, the 2025 low.
Should bulls break above the 20 SMA and 65.00 round number, this opens the door to 67.50, the 200 SMA. A rise above 70.00 creates a higher high.
