- EUR / USD is trading below 1.19 after breaking above that level on Wednesday.
- The dovish message from the US Federal Reserve puts pressure on the dollar, while problems with vaccines weigh on the euro.
- Thursday’s four-hour chart paints a bullish picture.
“It’s too early to talk about QE cuts,” said Charles Evans, president of the Federal Reserve Board, reflecting the message of the world’s most powerful central bank. It is planned that for some time it will continue to print dollars, which will lead to a depreciation of the currency. AT FOMC Meeting Minutes also reflects the Fed’s commitment to supporting the economy, despite acknowledging its recent recovery and improving outlook.
After speaking by several Fed members on Wednesday, Jerome Powell chair will hit the stage on Thursday and he will probably repeat the same message. This is likely to maintain bearish pressure on the dollar, but upbeat data could push it higher.
US Unemployment Claims on data for the week ending April 2, will fall below 700,000 after rising in the previous week. Other labor force data such as Nonfarm Payrolls and JOLTs showed an optimistic job market.
See Preview of Initial US Unemployment Claims: Parallel Paths
In the old continent, hopes for a faster exit from the covid crisis remain elusive. While the US has reached a third of its population with just one jab, the EU is barely behind that figure. Moreover, Europe is heavily dependent on the AstraZeneca jab, where the border between rare blood clots and an injection was confirmed.
Member States’ health ministers failed to agree on a common approach, one that will send a clear message. In some countries, AD vaccinations for young people are prohibited. Even if the authorities refuse the vaccine for everyone, trust will be undermined.
At that time, Germany is considering extending quarantineFrance is still under severe restrictions and Italy is also paralyzed. The virus continues to spread, putting pressure on recovery.
The minutes of the European Central Bank’s meetings are also due to be released on Thursday and are likely to confirm the bank’s pledge to keep long-term yields at a lower level.
Overall, while the dollar is under pressure from the Fed, concerns about a European recovery could push the euro down, potentially turn the trajectory of the currency pair back down…
Technical analysis of EUR / USD
The momentum on the 4-hour chart is pointing up and EUR / USD is trading above 50 and 100 simple moving averages, which is a bullish signal. However, it is limited to 200 SMA. The relative strength index is just below 70, outside of overbought conditions.
Some support is expected at 1.1860, the daily low. It is followed by 1.1820, which limited the euro / dollar rate at the beginning of the week, and then 1.1785 and 1.1760.
Resistance is at 1.1920, where the 200 SMA hits the price, followed by 1.1945 and 1.1990.
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