EUR/USD currency pair remains stuck around the 1.1660 area. Market participants are very much playing on a week of unknowns. The US Dollar has shown further signs of positive momentum across the FX board. That said, it has pulled back a bit, with decent support developing near the 1.1635 area. This surge comes right ahead of the much awaited release of the Federal Open Market Committee (FOMC) Minutes from the July meeting. In particular, these minutes should give us important clues as to what future monetary policy decisions will look like.
That leaves market players with little clue on the directional catalyst to be looking for this week. That uncertainty is affecting trading patterns among different currency pairs. Around the technical landscape for the EUR/USD, it is still battling with a modestly bearish 20 Simple Moving Average (SMA) on the 4-hour chart. The longer moving averages remain below encouraging a wait-and-see approach to the pair.
Christine Lagarde, President of the European Central Bank (ECB) addressing participants at the International Business Council of the World Economic Forum 3. Here are her top line thoughts on the European Union’s current economic state. Lagarde noted that the EU economy has shown remarkable resiliency in the face of persistent adversity.
“The EU economy proved resilient.” – Christine Lagarde
The EUR/USD pair is now facing the immediate support levels at 1.1635, 1.1585 and 1.1540. Conversely, resistance levels are seen at 1.1700, 1.1740, and 1.1785. These levels become incredibly important as traders look to determine new entry or exit point for positions while the market is continuing to see increased volatile conditions.
The Momentum indicator exhibits positive momentum in that it is still making progress upward. Even that is still not enough to get it across the 100 line. Source: eToro The Relative Strength Index (RSI) is just now rising above the 52 line. That gives us hope that there may be more openness to moving in either direction. The divergence between the Momentum indicator and the formation of new lower lows in price indicates a change in sentiment among traders.
That lack of activity in a weak trading environment gets further complicated by outside comments. Even prominent figures, such as former President Donald Trump, have expressed alarm over recent monetary policy. In his words, he’s done more harm to the housing industry than good—and he’s not taking a swing at just any Fed Chairman.
“Could somebody please inform Jerome ‘Too Late’ Powell that he is hurting the Housing Industry, very badly? People can’t get a Mortgage because of him. There is no Inflation, and every sign is pointing to a major Rate Cut. ‘Too Late’ is a disaster!” – Donald Trump
Traders are looking ahead to the release of the FOMC Minutes. They are especially eager to catch a hint of any future rate hikes or changes in the Fed’s economic forecast. As we know, market sentiments can change on a dime with the details that come out from these minutes. It’s equally important for participants to be kept up to date.