EUR / USD loses steam at 1.1900, declines returning below 200 DMA

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  • EUR / USD has been retreating from highs at 1.1910 and has now fallen back to around 1.1875.
  • The FOMC Minutes and Biden’s comments on infrastructure have failed to inject any direction into the market.

The EUR/USD has been retreating from the highs at 1.1910 in recent hours and, as the US session draws to a close, it has now fallen back to near 1.1875, modestly below its 200-day moving average in 1.1880. That means the pair has now trimmed its gains on the day and short-term bearish trading will now look for a move back to the 21-day moving average just above 1.1850. Long-term bears can expect a clean break below the 200 DMA to mean a move back to recent lows just above 1.1700.

Performance of the day

The main event of the day was the publication of the Minutes of the March FOMC meeting; the minutes contain no surprises and therefore do not appear to have had a major impact on the price action of the currency market. The President of the United States, Joe Biden, has also been speaking for the last hour or so; He noted that Democrats and Republicans will meet in the next few weeks to talk about infrastructure (as a reminder, he wants to pass the stimulus bill by the summer) and reiterated that he does not plan to raise taxes on anyone who makes less than $ 400,000 per year. and that it is open to alternative proposals regarding its plans to increase the US corporate tax to 28%. As has been the case with the FOMC minutes, there was nothing new from Biden, or anything to move the currency markets.

Summary of FOMC Minutes

The Fed recently released the Minutes for the March 16-17 FOMC meeting. Unsurprisingly, FOMC policymakers agreed that despite the improving economy, the US remains a long way from the Fed’s targets, and participants also noted that it would probably be “some time.” Before “further substantial progress” is seen toward their goals, this last point can be interpreted as meaning that FOMC policymakers agree that it will likely be some time before they begin to phase out the asset purchase program. The bank’s forward-looking guidance provided for this states that asset purchases will continue at the current rate until “substantial progress” is made toward the Fed’s Goals. FOMC participants agreed that the way forward It remains highly uncertain given the risks posed by the pandemic, and given those risks, the Fed’s current stance is appropriate.

The Minutes said that several FOMC participants highlighted the importance of communicating progress well in advance of any possible QE tapering, the timing of which will depend on the economy and the pace of recovery. Several participants, according to the Minutes, noted that changes in the policy trajectory should be based on economic results rather than economic forecasts; This is not surprising, and Fed Chairman Jerome Powell insists the Fed wants to see inflation sustainably above 2.0% and full employment even before it starts thinking about tightening policy.

Technical levels

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