After breaking above the critical 1.15 mark earlier in the day, the EUR/USD extended its rally and touched its highest level since mid-October at 1.1570. However, with the dollar limiting its losses and gathering strength in the second half of the day, the pair failed to stay in the positive territory and was last seen trading a couple pips below 1.15, losing 0.4% on the day.
Earlier today, the European Central Bank published the accounts of its December meeting which highlighted that there were growing signs that investors were becoming more concerned about the global growth outlook since the October meeting. “The Governing Council expected the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels below, but close to, 2% over the medium term,” the ECB reiterated.
In the second half of the day, FOMC Chairman Powell argued that the underlying economic data didn’t point to an economic slowdown. “The labour market by many measures ‘very strong’; see continued momentum in economic data,” Powell noted while speaking at The Economic Club of Washington. The US Dollar Index, which tested the 95 handle during the European morning, extended its rebound on Powell’s remarks and rose to mid-95 area.
Meanwhile, the European Union’s Trade Commissioner, who yesterday said that the EU and the U.S. couldn’t agree on the scope of trade talks, today stated that the optimism in trade negotiations had eroded to further weigh on the shared currency.
Technical outlook via FXStreet chief analyst Valeria Bednarik
In the 4 hours chart, technical indicators continue consolidating within positive levels, while the pair holds above moving averages, with the 20 SMA maintaining its bullish slope well above the larger ones. For the pair to extend its gains, a firm advance above the mentioned Fibonacci resistance is critical, with bulls being more convinced on a break above this Thursday’s high.
Support levels: 1.1460 1.1420 1.1390
Resistance levels: 1.1530 1.1560 1.1595