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EURO : Price Stalls Ahead of FOMC

(Wed, 19 Aug 2020). EUR/USD tests May 2018 High. MACD remains above the zero-line. Fibonacci levels continue to provide firm levels of support and resistance. USD remains under pressure ahead of FOMC minutes.

FOCUS TURNS TO FOMC

After nine consecutive weeks of gains, EUR/USD price action has favored the bulls, with prices breaking above the psychological level of 1.1900, eager to test the May 2018 high. Now, as the Dollar remains under pressure, the focus turns to the economic calendar, with emphasis being placed on the Federal Open Market Committee (FOMC) minutes which will be released tonight at 18:00 GMT. Although Jerome Powell has suggested that low rates will persist for the foreseeable future, falling Treasury Yields have continued to undermine the Dollar and any mention of yield curve control may be an additional driver for price action.

 

EUR/USD APPROACHES FIBONACCI RESISTANCE

From a technical standpoint, the weekly chart below highlights Fibonacci levels from two major moves, the primary move (pink) which is plotted between the January 2017 low to the February 2018 high and the secondary move (orange), taken from the February 2018 high to the March 2020 low. After rebounding off of the 61.8% retracement of the primary move (1.11841), a strong upward trend has been present, with prices now looking to test the May 2018 high, at 1.19960. However, the 61.8% retracement of the secondary move, continues to hold as support at 1.182, while the 23.6% retracement of the primary move may keep bulls at bay as prices near the 1.200 mark.

 

EUR/USD WEEKLY CHART

MACD REMAINS ABOVE ZERO

Using a shorter time-frame, the four hour chart below indicates that the Moving Average Convergence/Divergence (MACD), a technical indicator used to determine the direction and momentum of the trend, is currently hovering above the zero-line, suggesting that an upward trend is present and that momentum is still relatively strong, for now. In addition to this, price action remains in a confluent zone, between the above mentioned Fibonacci levels.

 

 

 

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