EUR/USD hangs in balance ahead of Fed, NFP and Eurozone data
Fawad Razaqzada January 30, 2019 12:35 PM
The FX markets have been rather quiet so far this week. However there have been a couple of exceptions. The pound, for example, fell noticeably yesterday after MPs backed a plan to renegotiate Theresa May’s Brexit deal with the EU, while the Australian dollar jumped on the back of slightly stronger Aussie inflation data overnight. However, the price action on all the other major currencies has been like watching paint dry, not least the EUR/USD. Indeed, the Dollar Index’s range so far this week has been a grand total of… 30 pips. Clearly, market participants have been in no rush to open meaningful positions in FX ahead of the FOMC rate decision tonight and Friday’s US jobs report, not to mention the upcoming Eurozone data, including GDP (Thursday) and CPI (Friday). These events have the potential to move the FX markets sharply, so this could just be the quiet before the storm.
From a technical point of view, we already think that the Dollar Index is looking bearish in the short-term outlook. This makes us slightly bullish on the EUR/USD by default. But taking a closer look at the EUR/USD and we note that the sharp reversal we saw on Friday may have been a game-changer. The brief drop below the 1.13 handle took us to a new low for the year, before rates reversed sharply to rally above the previous resistance at 1.1390. At the start of this week, the EUR/USD has held above this pivotal level but hasn’t exactly rallied away from it. The fading bullish momentum must be disheartening for the bulls. This is typical of a market being stuck in an ugly range, with both the bulls and bears not being in full control. Nonetheless, we have seen two further green closes after Friday’s reversal. The bears would be happy again should rates break below that 1.1390 level again. So far this week, they have just about managed to defend the 1.1440 resistance level. But a potential break through this area could pave the way for a more meaningful rally later on in the week.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.