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EUR/USD on the cusp of breaking the 50-day SMA after Fed testimony -by Ecork

Talking Points Rate EUR/USD

EUR/USD on the cusp of a rally above the 50-day simple moving average (1.607) as the advance extends after Federal Reserve Rate Decisionand moving above the moving average may lead to further advances in the exchange rate because the testimony of Chairman Jerome Powell does little to limit the advance from the monthly low (1.0359).

EUR/USD on the cusp of breaking the 50-day SMA after Fed testimony

The EUR/USD pair appears to have reversed after defending the yearly low (1.0349), and advances earlier this month may test the former support zone around the May high (1.0787) as it now appears to act as resistance.

Looking ahead, it remains to be seen if the EUR/USD will respond to the 50-day SMA (1.0607) as the moving average continues to reverse a negative slope, but the limited reaction to the Fed’s semi-annual testimony lifts The scope for further appreciation in the exchange rate even as President Powell insists that “tThe US economy is very strong and well-positioned to handle a tighter monetary policy.

Comments suggest the FOMC will introduce another 75 basis points interest rate in its upcoming rate decision on July 27, as officials anticipate a steeper path for US interest rates, and it remains to be seen whether President Powell will continue to tame speculation. To raise the interest rate by 100 basis points, as the head of the Central Bank warns of this It would be “extremely difficult” to promote the easy landing of Economie.

Until then, the EUR/USD may see a bigger recovery after the failed attempt to test the yearly low (1.0349), but the slant in retail sentiment appears set to continue as traders have been long on the pair for most of the year.

The IG Customer Sentiment Report show 60.83% of merchants are Currently long net EUR/USD, With the ratio of long-term traders to short selling stands up at 1.55 to 1.

The number of long traders is 12.70% lower than yesterday and 17.50% lower than last week, while the number of short traders is 14.33% higher than yesterday and 41.01% higher than last week. The drop in net long position comes as EUR/USD comes in against the 50-day SMA (1.0607), while the jump in net short interest helped mitigate the slant in retail sentiment as 68.58% of traders were inclined to purchase. pair last week.

With that said, the EUR/USD may try to push above the moving average as it extends the advance past the Fed’s exchange rate decision, and the exchange rate may eventually Testing of the previous support area around the May high (1.0787) as it appears to act as resistance.

EUR/USD daily price chart

EUR/USD daily price chart

source: Trading View

  • EUR/USD is approaching the 50-day simple moving average (1.0607) after it failed to close below 1.0370 (expansion of 38.2%), with Relative Strength Index (RSI) Reversal before the oversold zone as the exchange rate defends Annual Low (1.0349).
  • Movement above the moving average may push EUR/USD towards 1.0640 (78.6% expansion)with a break/close above the 1.0710 (100% expansion) area, the Fibonacci overlap opens around 1.0760 (61.8% expansion) to 1.0780 (100% expansion), which is in line with the monthly high (1.0774).
  • It remains to be seen if the EUR/USD will react to the moving average as the indicator continues to reverse negative slope, but needs to close below the 1.0500 handle (100% expansion) to bring 1.0370 (38.2% expansion) Region Back on the radar.

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