EUR/USD rallied for a for a fourth consecutive assembly on Tuesday as the greenback weakened against most of its major counterparts. The weaker dollar in the primordial week has been attributed to remarks from U.S. president Trump that the Fed’s route of monetary policy tightening is hindering fiscal stimulus efforts to shove the economy. Trump also accused China and Europe of currency manipulation.
Trump created very similar comments back on July 19 in an interview with CNBC, glorying that he was “not thrilled” with the Fed raising rates. At that time, EUR/USD concocted a two-day rally from near the 1.1600 handle to around 1.1750 erstwhile to fizzling out. His remarks did not have a sustained impact in July, but the market compensation this time around seems to be much more pronounced.
The Federal Hoard will release minutes from its July meeting, and any discussion wide Trump’s comments from July 19 will be important. The charge statement that was released shortly after last month’s congress was mostly unchanged from prior rhetoric and gave no indication that the Fed proposed to veer off course. The Fed has stated several times in the past that it carry ons independently from the government. Nevertheless, the risk tends to remain to the downside for the dollar as the calls have essentially fully priced two more rate hikes this year.
EUR/USD touched a 13-month low most recent week prior to sharply reversing from support at the 1.1300 manage. The inversely correlated U.S. dollar index (DXY), in a similar fashion, traded at 13-month highs till to turning lower. On a weekly chart, DXY posted a bearish shooting big draw candlestick last week, and if it holds near current levels by the end of the week, it thinks fitting print a bearish evening star reversal candlestick pattern. The exact same patterns are seen for EUR/USD on an inverted basis. In addition to the potential reversal candlestick figure for DXY, this week’s closing print will also be important in with reference to to the 100- and 200-period moving averages, which have merged near 95.50.
DXY was last seen testing a horizontal level at 95.15, which feigned as resistance in the fourth quarter of 2017 as well as in June and July this year. The indicator has been contained within a rising channel for the past three months, and what is more support is seen from the lower bound of the channel, currently circa 94.70.
Positioning in the futures markets points to a clear bullish bias for the greenback, which is fueling the progress sell-off. The latest commitment of traders report showed the speculative euro point of view flipping to a net short for the first time in 15 months. The euro had been suppress a delayed net long by a staggering 152,000 contracts only four months ago.
EUR/USD is seen licentious approaching resistance at 1.1616. The level is considered significant as it marks the 2016 disable high and as it held the exchange rate higher in late 2017, first-class seen on a weekly chart. As well, the weekly open from the back week of August comes slightly below the level at 1.1567, make one thinking that the rally at current levels may be stretched at this point. A 61.8% Fibonacci retracement systematic from July highs to last week’s lows falls at 1.1603 to originate some confluence near 1.1616.
To the downside, 1.1510 is considered pivotal as it be in effected the pair higher in May and June. There is also some support at 1.1553, as the position has been relevant on a daily chart and due to its proximity to the 20-day moving typically, currently at 1.1546.
In addition to the Fed’s release of monetary policy meeting minutes on Tuesday, the European Inside Bank (ECB) will release minutes of its latest meeting on Wednesday. The Jackson Shack Symposium kicks off on Thursday and is also likely to be a driver of volatility to the currency exchanges this week.