Although the fundamental of both Euro and Dollar is weak and strong accordingly as ECB continued to ease monetary policy and the Fed holds further rate cut, the dollar continues to weaken, causing EURUSD to climb through December 2019 so far.
In the latest FOMC conference, Powell has reiterated Fed’s decision to keep interest rate unchanged and is confident to reach their inflation target of 2%, and is happy with the 3 rate cut this year.
However, the market sentiment has changed from a ‘no rate cut’ to a ‘no rate hike’. Both mean unchanged but the first is hawkish and the later is dovish.
When asked about a rate hike, Powell insisted that inflation has to meet 2% before a rate hike can happen.
EURUSD D1: Price Approaches Extreme Top of 18-Month Falling Channel.
As such, the dollar weakened yesterday on weak sentiment as a rate hike is nowhere in sight, causing EURUSD to climb and reach a critical juncture.
EURUSD found resistance at 1.1140 region, 20 pips shy from a 2-month high at the extreme top of a 18-month falling channel, as well as the 200 SMA.
On the other hand, the dollar index has also reached the bottom of its 18-month rising channel.
If EURUSD continues to climb, watch for resistance and reversal signal as it reaches the price range of 1.1153 and 1.1175.
If EURUSD reverses and fall, wait for the price to break below 1.1072 and await pullback to sell again.
Vice versa, if EURUSD breaks above the top of the 18-month falling channel, await pullback to buy.