The euro extended its winning streak against the US dollar yesterday as EURUSD closed higher for a third consecutive day–the longest that we have seen since November! The currency pair traded steadily higher throughout yesterday’s session after opening at 1.1047. It reached an intraday high of 1.1089 after clearing resistance at 1.1063. By the day’s close, it was up 23-pip gain.
There was broad dollar weakness in the latter part of yesterday’s trading. Reports that US President Donald Trump and Federal Reserve Chairman Jerome Powell met at the White House spurred speculations that the central bank’s monetary policy will remain accommodative. According to a press release from the Fed, the two officials met “to discuss the economy, growth, employment, and inflation.”
The US President soon after posted on social media that their meeting was “good & cordial.” This may have taken market participants by surprise because Trump is often critical of the Fed. He has been a staunch supporter of lower interest rates for the US. In fact, he has gone as far as describing Powell as an “enemy” of America.
This news then dampened demand for the US dollar as market participants were left to wonder how much of an effect the President may have on a supposedly-independent central bank.
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EURUSD Outlook
On the hourly time frame, EURUSD is trading steadily higher. A rising trend line becomes apparent when you connect the currency pair’s higher lows since November 14. Should dollar weakness continue or if data from Europe tops expectations, we could see EURUSD test yesterday’s highs at 1.1089. Euro zone’s current account for September is expected to show that the amount that the region exported were 22.3 billion euros more than the value of its imports.
On the other hand, a break of the trend line could send EURUSD lower to test support at the 100 SMA and 200 SMA at 1.1030. If the moving averages do not hold, the next support will be at 1.0997 where it made lows on November 14.More content
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