EUR/USD currency pair is holding firm on Thursday and has moved in a very narrow range, almost unchanged at the 1.1587 level. Until very recently — in fact, thanks to the recent political developments here in the United States — that’s an unusual stability. Last night, the House of Representatives passed a short-term, continuing budget resolution to bring a halt to the longest government shutdown in U.S. history. That bill is now awaiting President Donald Trump’s signature. All market participants are hanging on its first moves for clues on the direction of economic policy and interest rates.
After all, the recent panlegislative activity has produced a trove of cautious optimism in the markets. The Federal Reserve’s position is still key. The move was widely telegraphed, but the central bank has soft-pedaled its hawkish past. Indeed, the market is still pricing in a possible interest rate cut by December. Such an uncertain climate for monetary policy might have an outsized effect on the performance of the EUR/USD pair going forward.
To put it in more technical terms, the EUR/USD currency pair has been trending bearish in recent weeks. The signal line for this trading pair, meanwhile, has fallen below 80, indicating less overbought conditions. It’s really just beginning its long slow march to 20. This change lays the groundwork for an expected bearish momentum to take hold in the market. Having made a correction above the resistance level of 1.1605, experts are sure that the pair is poised to fall more. They forecast a new leg down in the near-term.
Market analysts have set major downside targets for the EUR/USD pair seen at 1.1505 and 1.1405. This suggests a downward breakout from the current trading range. Such a move would help set the stage for a drop back towards the first major target at 1.1505. If this key mark is breached, it may open the door for additional extension of the bearish move down to 1.1405.
Technical indicators, including the MACD, confirm this negative sentiment. These are all technicals that suggest selling pressure will persist in the near term. Traders are on the lookout for political happenings and economic indicators. They are looking for strong enough movements in one direction or another to support either their optimistic or pessimistic projections.
The current trading scenario reflects a broader sentiment among investors who are weighing the implications of the U.S. government’s fiscal policy alongside developments in European economic indicators. The combination of these factors has produced an expensive and opaque market landscape where currency traders need to tread lightly.
As the financial markets await more clarity regarding interest rate adjustments and overall economic conditions, the EUR/USD pair’s performance remains closely tied to external developments beyond mere technical analysis. The outcome of the U.S. government shutdown, expected to impact investor confidence and spending patterns, could impact exchange rates.