The pair continues trading in a descending trend prior to the Fed Interest Rate Decision as market participants are expecting hawkish comments from the regulator. The US economy keeps growing – the unemployment rate is falling while inflation, the second most important indicator affecting the rate decision, is approaching its 2% target level. Growth in inflation was determined by the recent tax reform and trade wars, which led to an increase in prices for some products. The Dollar is also supported by widening in the spread between 10-year government bonds in Germany and the US, resulting in capital inflow into US securities and a fall in the Euro.
Additionally, recent commentaries by ECB President Mario Draghi left no chances of changes in monetary policy in the eurozone any time soon. The head of the regulator stated that in the first quarter of the year the eurozone economy showed almost no growth and therefore still requires cheap credits to support some of its sectors.
Support and resistance
The Stochastic is in the oversold zone, indicating a possibility of an upward correction.
Support levels: 1.2000, 1.1965.
Resistance levels: 1.2085, 1.2145.
Short positions can be opened below the level of 1.2000 with the target at 1.1965 and stop-loss at 1.2035.
Euro vs US Dollar
|Support levels||1.1965, 1.2000, 1.2085, 1.2145|
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