The EURUSD pair has finally achieved bullish breakout from wider price band limit the pair was trapped in for last 3 months. While the pair managed to achieve an upside breakout, the cause for trigger turned out to be dovish Fed meeting minutes rather than updates on Sino-U.S. trade talks as was widely expected. The pair is currently trading at 3 month highs having breached long term resistance at 1.14985 during US market hours with positive momentum from bullish breakout helping the pair scale mid 1.15 price level and settle in consolidative price action in late Asian market hours as visible in one hour price chart. While Fed meeting minutes served as trigger for breakout, US dollar also suffered some bearish influence prior to release of Fed minutes on dovish comments from speech of multiple FOMC members.
ECB Meeting Minutes Could Serve As Next Breakout Trigger
According to Fed minutes update released yesterday, a few committee members wanted to hold rate hike steady since December owing to ongoing slowdown in global and US economy. The update also revealed that majority of committee members agreed to patiently watch the market and consider slowing down rate hike pace which went in line with investors’ expectations for US Fed to pause rate hike plans for 2019. This greatly changed the long term outlook of US Greenback which had recently attracted major fund flow in market and was even viewed as recession proof safe haven asset for short while owing to multiple rate hike forecast by Fed. The changed outlook took the winds out of USD bulls and greatly boosted risk appetite in market. As of writing this article, EURUSD pair is trading at 1.1562 up by 0.18% on the day.
Investors are now focused on ECB’s latest meeting minutes update and if the update downplays impact of economic slowdown in European markets or hints at possible early rate hike by central bank in 2019 it could further strengthen EUR bulls and facilitate breakout above 1.16 price levels. In US market, today’s calendar sees the release of initial jobless claims, new home sales data and a speech from Fed Chair Jerome Powell which are expected to provided short term profit opportunities for retail traders. When looking from technical perspective, now that the pair has broken out of wider price band limits, the path with least resistance is towards upside. RSI & Stochastic momentum indicators have moved slightly above oversold mark in intra-day and daily charts. To the upside the pair faces resistance around 1.1603/1.1612 price range and immediate support to the downside is at 1.14985 followed by psychological support at 1.1365 handle respectively.
This article was originally posted on FX Empire
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