Article by ForexTime
The EUR/USD is testing trend line resistance as it appears that Wednesday’s FOMC report has convince traders that the Fed is further away from a tightening that previously though. The lack of evidence for a tightening has pushed the yield differential in favor of the Euro and eroded sentiment in the greenback.
The Fed said they had been leaning toward a tightening in July but had yet to see sufficient evidence to push the committee toward a rate liftoff. The recent events from China make September a difficult call. While participants cheered the improvement in the economy since the weak Q1, validating their forecasts, a few were disappointed that growth was still lower than had been projected earlier in the year.
On inflation, it’s still expected to pick up, although some saw downside risks due to economic and financial developments abroad. With oil prices tumbling and grains such as soybeans and corn hitting 52-week lows, the headline inflation number will have a difficult time gaining traction.
The technicals are relatively neutral but current price action favors a positive Euro. The EUR/USD exchange rate is testing trend line resistance near a downward sloping trend line that comes in near 1.1175. Support is seen near the 50-day moving average at 1.1075. Momentum on the currency pair is positive with the MACD (moving average convergence divergence) index printing in the black with an upward sloping trajectory.
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