EUR/USD: a clear increase in the face of expectations of a rate cut from the Fed

© Reuters. EUR/USD rises sharply

The EUR/USD pair, which has shown up throughout the day yesterday, has significantly accelerated its progress in the evening, managing to reach a peak at 1.1261, the highest for nearly 3 weeks.

The origin of this net strengthening of the Euro-Dollar is mainly a generalized weakness of the Dollar, largely tied to expectations dovish in regards to the Fed.

In the Face of the commercial war that settles in the long term, and in the face of negative consequences more visible, that the situation has on the economy, the market believes now that the Fed will do 2 cuts key rate this year, thus cancelling the half of the increases decided upon last year.

Several banks have recently updated their rate expectations of the Fed, big names such as Barclays (LON:BARC) or JP Morgan anticipating now 2 rate increases before the end of the year in their base scenarios.

However, it is not necessary to forget that the Euro in its side is subject to many risks, including political, with an arm of iron that is emerging between the EU and Italy on budget, and with more generally a growth in berne and a rise of populism that could end up worrying investors.

From a graphical point of view, it will be recalled that the area of 1.1260-65 on which the EUR/USD pair happens to them is an important strength, since it has already blocked the movements of a rebound in the 22nd and 23rd of April, 1 may and 13 may.

Beyond that, the psychological threshold of 1.13 will be the next goal.

Has the decline, the psychological threshold of 1.12 will be the first important support, but it will be necessary that the pair of brand new hollow annual 1.1106 to renew the bearish momentum.

Finally, it should be noted that the economic calendar of the day will be the occasion of some events influential, with the CPI and the unemployment rate in the euro area at 11 a.m., a speech by Powell at 15: 45, and the orders of the US industry to 16h.

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