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Oct 08 - 02:36 PM
EUR/USD - COMMENT-Fed May Be Only Hope For EUR/USD Longs
First appeared on eFXplus on Oct 08 - 10:55 AM

EUR/USD's rally off the Oct. 1 low has run into a brick wall of technical resistance near 1.1000, and longs are likely concerned that U.S. and German datanL2N26T0DFhaven't led to a breakthrough.
The pair is dropping away from the 21-DMA and 50% Fib of 1.1109-1.0879 and now threatens to break below the 10-DMA and Oct. 3 low.
EUR/USD bears are taking control after IMF Chief Georgieva said the global economy is now in a synchronized slowdown.
EUR/USD took another hit after a Bloomberg headline quoted a government official saying Germany sees no need for a stimulus package.
Downside risks are aligning against EUR/USD longs, and the Fed might be their last hope.
Recent U.S. data suggests economic growth could be in jeopardy.
As a result U.S. Treasury yields have tumbled while Eurodollar and fed funds futures prices have rallied.
The probability of a 25bps cut on Oct. 30 now is just above 80% FEDWATCH and nearly 87bps of cuts are expected by January 2021, which contrasts sharply with market expectations of the ECB ECBWATCH.
EUR/USD longs will need the Fed's rhetoric, especially Powell's, to lean more dovish if they expect the rally off October's low to extend.

chart: Click here

Refinitiv IFR Research/Market Commentary


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