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From the point of view of the pair EUR/USD, the balance sheet of the Fed meeting last night was largely positive.
The Euro was hovering around 1.1120 before Jerome Powell will speak. After an initial downward movement and a low of 1.1080, the EUR/USD pair largely bounced up to mark this morning, a summit at 1.1175.
The pair has relatively ignored the confirmation of the lower rate of 0.25% and the minor changes to the FOMC statement, but has shown much more volatile in the face at the press conference of Jerome Powell.
After an initial fall, when Powell said that “the monetary policy is in a good place”, which meant that the Fed would lower most rates (supporting the Dollar), the EUR/USD received further clarifications provided by the boss of the Fed.
Powell has in effect stated that a significant increase in inflation will be needed before any interest rate increase. In clear, this means that as long as Powell will lead the Fed and that inflation will be under control, it is unlikely that there is a rate increase, which is negative for the long-term prospects of the Dollar, and explains the increase of the EUR/USD in the face of the intervention of Powell.
Since its highs of this morning, the pair has corrected slightly, moving on to 1.1150 at the time of the writing of this article, but keeps an upward bias in the short term.
With a little hindsight, one realizes, however, that the rally yesterday was stopped just before the summit on 21 October at 1.1179. Resistance seems to build up towards 1.1175-80, which, added to the psychological threshold of 1.12 little above, form a barrier which should lead to caution in the immediate future.
Tomorrow, the market’s attention will turn to the report to the NFP on job creation, US in the month of October. Most analysts expect job creation in sharp decline, mainly because of strikes in the factories of General Motors (NYSE:GM), and failing to really weigh on the Dollar, this could limit any attempt to progress in the greenback and catalyzing a new movement of the Euro to rise.
Provided that the Euro-Dollar to reach quickly to cross the resistance zone of 1.1180-1.12, the prospects remain bullish.
That provide the banks for EUR/USD?
It should be noted that a number of banks have also developed a opinion is bullish for the EUR/USD pair in notes of analysis recent.
Danske Bank estimated, for example, that the differences between the policy of the Fed and the ECB will keep EUR/USD around 1.11 to horizon 1 month, before a rebound to 1.13 for the next 3 months, and then at 1.15 for the next 12 months.
For its part, Commerzbank (DE:CBKG) note that the pair EUR/USD has supports important 1.1073, and 1.1043 in the short term. In the longer term, the bank points to the moving average 200 weeks 1.1356 as a critical threshold, it is expected that the crossing leads to the EUR/USD to 1.1520/70 at a minimum.
Finally, the bank UOB highlights the peak from 21 October to 1.1179 as the first major obstacle, and identifies a first support at 1.1110, before 1.1070, a threshold below which it considers that the upward pressure decreases, and the chances of further increase.
