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| EUR/USD four-hour chart, source:FXDD.com |
cf. [EUR] Long Bias to Euro 2020 0511
cf. [EUR] Retreating Euro 2020 0505
The currency pair EUR/USD which has lowered its peaks moves steadily. The pair rose in Asian session and Europe session but it retreated in New York session on Tuesday.
After the correction, the price of the pair is nearly unchanged on early Wednesday.
Before we analyse the chart of the currency pair, we need to be informed that Fed Chair Jerome Powell speaks at 13:00(UTC), Wednesday. The investors seem to wait his speech and the market moves quietly.
And the market is predicted to move explicitly after Powell's speech on economic issues.
As well as the peaks of EUR/USD lower, the support prices have risen little by little since late March. The triangle pattern is formed, and the investors can guess the momentum of euro is piled up.
Fed has cut the benchmark interest rate near to zero and does Quantitative Easing Program. It support the graph of EUR/USD may surge. The fear of recession of US economy and second round of US-Sino trade war still threaten greenback.
Therefore, the long bias to euro is available.
And the market expects Fed may cut the Federal Funds Rate to negative rate. On Tuesday, the fed fund futures contracts implied investors expected the interest rate would be negative in June 2021. Meanwhile, the rate options market was putting in a 23% probability of the key federal funds rate falling below zero by end-December
The market expects Fed's President Powell to take cues from his colleagues and dash hopes for negative rates during his webcast with the Peterson Institute for International Economics on Wednesday.
But its possibility is low.
The pandemic is still big issue to Forex market. The hopeful news against the respiratory virus is released, the risky assets are bought more than safe-haven assets such as greenback, Japanese yen. In the other case, the investors buy dollar, yen and gold.
The lockdown around the world hurts the global economy and the rise of euro is limited.
When the outbreak of coronavirus, the market participants expected the respiratory COVID-19 is controlled soon and the markets will grow forming V pattern or U pattern.
But the forecast of the economy recovery with Nike emblem gains the support gradually. It means the recovery of global economy became more difficult.
Gjallarhorn got the long position of futures, euro-fx. It is liquidated in September.
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