- The euro recovers against the US dollar with concerns about the independence of the Fed limiting losses.
- The Eur/USD price action is recovered above 1,1600 while the momentum becomes neutral.
- Tariffs and trade agreements remain the focus for the EUR/USD.
The euro (EUR) is strengthening against its counterpart of the US dollar (USD) on Wednesday, since operators change their focus on concerns about the possible replacement of the president of the Federal Reserve (Fed), Jerome Powell.
After five consecutive days of losses, the EUR/USD reached an intradic minimum of 1,1562 before recovering and re -quoting above 1,1600 at the time of writing.
With US president Donald Trump, intensifying efforts to dismiss Jerome Powell as president of the Federal Reserve, concerns about the independence of the Central Bank are weighing on the US dollar.
The price action of the Eur/USD is recovered with 1600 support
In the Technical Front, the EUR/USD has registered a notable recovery on Wednesday, with the psychological level of 1,1600 now providing support for the immediate movement.
The torque is now quoted about 1,1670, with the level of psychological resistance of 1,1700 forming an additional barrier for short -term movement. With the EUR/USD moving towards the simple mobile average (SMA) of 20 days in 1,1683, the relative force index (RSI) in that momentum remains neutral.
However, with commercial conversations in the focus, the downward risks remain. The Fibonacci recoil level of 38.2% of the movement from May to July provides additional support in 1,1538, which could bring back the level of 1,1500 to the focus.
Meanwhile, the simple mobile average (SMA) of 10 days in 1,1691 and the 20 -day SMA in 1,1680 have been transformed into resistance, indicating a growing bearish pressure.
Meanwhile, the 50 -day SMA in 1,1483 marks the following important support. The immediate downward objectives are between 1,1480 and 1,1440, where the 50 -day SMA converges with the 50%fibonacci setback level.
US Dollar – Frequently Questions
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
