Daily Market Insights

 
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4/5/2017
EUR/USD

Dollar Looks Strong For the day

The Federal Open Market Committee meeting indicated that the labor market became stronger while the economic activity slowed down. The unemployment rate slowed down. The U.S. Federal Reserve did not change the interest rates yesterday but hinted that there will be two more rate hikes this year.

The Fed raised its benchmark rate by a quarter percentage point at its last meeting in March to a target range between 0.75 percent and 1 percent.Fed’s policymakers are waiting for a clear clarity on the tax cuts, infrastructure spending and regulatory changes that the Trump’s administration will be able to implement.

The Fed statement said that "The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic condition will evolve in a manner that will warrant gradual increases in the federal funds rate."

The EUR/USD pair remains bearish with 1.0927 resistances intact and has been rejected at this level few times in recent sessions. Deeper decline is still expected for the pair as long as resistances hold the area.

The EUR/USD pair dropped further down at the start of the day. We might see strong support at 1.0857 to bring rebound. The pair stays below resistances so far at this point and moves towards the 50EMA. Thus, we’d expect resistance to remain bearish.

The pair indicates a near term bearish reversal and looks to continue with a downside bias. The price action signals astrong rejection, clearly indicating a trend reversal that shifts the momentum. Current developments suggest that the medium term downside is expected to be further low and the focus shall be at 1.0857. Any break here should make lower lows and we must wait for the price action signal around this area.

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