The EUR/USD to Rebound Fizzles as Federal reserve Chairman Powell Tames Paris for IT

EUR/USD-Rate discussion Points

The EUR/USDpulled back from a fresh weekly high (1.0897) as Chairman of the Federal Reserve Jerome Powell tames speculation negative policy interest rate (IT), but the exchange rate may trade within a range, defined as the decline from earlier this month fails to produce a test of the The April low (1.0727).

The EUR/USD to Rebound Fizzles as Federal reserve Chairman Powell Tames Paris for IT

The EUR/USD is little changed compared to the beginning of this week as President of the Powell insists that “the tthe committee is of the opinion, a negative rate has not really changed” with the central bank of the head, to say that “this is not something that we foresee d’” just as The President Donald Trump allow the growth of a positive effect of US interest rates.

Nevertheless, the President, Powell warns that the economic shock of COVID-19 “may require additional measures” as large cities like New York, remain on lockdown, and it seems that the Federal Open Market Committee (FOMC) will continue to endorse a dovish forward-guidance for monetary policy of the central bank of the head is committed to youare our tools to their full until the crisis is past and that the economic recovery is underway, and the.”

However, the COMMITTEE may proceed to a wait-and-see over the next few months, as the Federal reserve officials are in position “ready to face a range of possible outcomesand President of the Powell and Co. can simply trying to gain time, at the time of the next interest rate decision on 10 June, as the“the global policy response to date has provided a measure or relief, and stability, and provide support to the recovery when it comes.”

It seems that the European Central Bank (ECB) will take a similar approach, in spite of the The German Constitutional Court decision as President Christine Lagarde insists the central bank.will do all the necessary within our mandate, to support the recovery.”

The response of the leaders of the ECB suggests that the central bank will continue to expand its balance sheet throughout 2020 as a member of the board of directors Isabel Schnabel points out that ” the Board of Governors “undeterred, in our willingness and ability to act” but it remains to be seen if the President Lagarde and Co. to strengthen the support of the monetary union, such as Italy passes a MILLION 55B fiscal stimulus program.

In turn, the ECB may also take a dovish forward guidance at its next meeting, on 4 June, but the Euro could depreciate against its U.S. counterpart in the current context, the Board of directors recalls that the Euro Zone interest rates are expected toto remain at their present or lower levels until we have seen the inflation outlook will be robust to converge to a level fairly close to, but below, 2%.”

That said, the Euro may face headwinds throughout the 2020, but with the EUR/USD may trade in a range set in September, while the decline from earlier this month fails to produce a test of the The April low (1.0727).

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EUR/USD-Rate-Daily Chart

Source: The Negotiation Of The View

• Keep in mind, the value of the opening area has been one of the major dynamics for the EUR/USD in the fourth quarter, or 2019, as the exchange rate is sculpted, a major low on October 1, with a high for the month of November, occurring during the first full week of the month, while the low for the month of December arrived on the first day of the month.
• The the opening area for 2020 has shown a similar scenario as the EUR/USD market is the most high of the month on 2 January and, with the exchange rate is the sculpture of the month of January high during the first trading day of the month.
• However, the opening area for the month of October is less relevant in the middle of the upswing in volatility, with the decline of the high annual (1.1495) producing a break of the February low (1.0778) that the exchange rate has moved to a new 2020 low (1.0636).
• Nevertheless, the EUR/USD may trade within a defined range in May, in the midst of the failure of the attempt to test the 1.1040 (61.8% expansion) in the region, that aligns with the April high (1.1039), while the decline from earlier this month seems to have stalled the advance of the The April low (1.0727).
• In turn, the EUR/USD could continue to follow the April-to the beach, in the middle of the lack of momentum to break/close below the 1.0780 (100%) of the region, with a move above the 1.0830 (78.6% expansion) to 1.0860 (23.6% retracement), for the Fibonacci overlap around 1.0950 (100%) to 1.0980 (78.6% retracement) on the side.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong