• Mon. May 20th, 2024

EUR/USD remains under pressure above the mid-1.0800s, Fed rate decision eyed

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  • EUR/USD remains on the defensive near 1.0872 amid renewed USD demand. 
  • The Fed is anticipated to hold benchmark interest rates steady in the range of 5.25%–5.50% at its March meeting.
  • ECB policymakers signaled progress in easing inflation and began discussions about the rate cut.
  • The Federal Reserve’s (Fed) monetary policy meeting will be a closely watched event. 

The EUR/USD pair edges lower to multi-day lows around 1.0870 on the firmer US Dollar (USD) during the early Asian session on Tuesday. The Federal Reserve (Fed) monetary policy meeting on Wednesday will be in the spotlight, with no change in rates expected. Meanwhile, the cautious mood in the market might lift the Greenback against the Euro (EUR). The major pair currently trades around 1.0872, unchanged for the day.

The recent US economic data showed inflation in the US economy remains elevated, and this pushed out market expectations for the first rate cut in June. The Fed Chairman Jerome Powell said two weeks ago that the central bank is not far from the confidence it needs to cut rates, while some Fed officials expect the first rate cut could happen later this year or during the summer.

The Fed will announce its interest rate decision on Wednesday, which is anticipated to hold benchmark interest rates steady in the range of 5.25%–5.50% at its March meeting. Investors have priced in a nearly 73% chance that the Fed will cut rates in July, according to the CME FedWatch Tools.

The European Central Bank (ECB) decided to keep borrowing costs at a record high at its March meeting. Nonetheless, the central bank policymakers signaled progress in easing inflation and began discussions about the rate cut. The ECB Governing Council member, Pablo Hernandez de Kos, said that the central bank may start lowering interest rates in June if inflation in the eurozone continues to decline. Meanwhile, ECB policymaker Mario Centeno stated that cutting borrowing costs could help prevent a euro area recession.

Additionally, ECB Governing Council member Klaas Knot penciled in June for a first-rate cut and expects three rate cuts this year, while ECB President Christine Lagarde said that June is the earliest it is likely to cut interest rates after the ECB lowered its forecasts for inflation and estimated it will reach its 2% target in 2025.

Looking ahead, market players will keep an eye on the German and Eurozone ZEW Survey on Tuesday. Also, the US Building Permits and Housing Starts will be released later in the day. The attention will shift to the Fed interest rate decision and press conference on Wednesday. Traders will take cues from this event and find trading opportunities around the EUR/USD pair.

EUR/USD

OVERVIEW
Today last price 1.0874
Today Daily Change 0.0002
Today Daily Change % 0.02
Today daily open 1.0872
TRENDS
Daily SMA20 1.087
Daily SMA50 1.085
Daily SMA100 1.0861
Daily SMA200 1.0839
LEVELS
Previous Daily High 1.0906
Previous Daily Low 1.0866
Previous Weekly High 1.0964
Previous Weekly Low 1.0873
Previous Monthly High 1.0898
Previous Monthly Low 1.0695
Daily Fibonacci 38.2% 1.0881
Daily Fibonacci 61.8% 1.0891
Daily Pivot Point S1 1.0857
Daily Pivot Point S2 1.0841
Daily Pivot Point S3 1.0817
Daily Pivot Point R1 1.0897
Daily Pivot Point R2 1.0922
Daily Pivot Point R3 1.0937

 

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