Home Forex News EUR/USD Shows Weak Bearish Momentum After Fed’s Powell Shut Down Negative Interest...

EUR/USD Shows Weak Bearish Momentum After Fed’s Powell Shut Down Negative Interest Rate Speculation

  • Powell says negative interest rates are not an option.
  • S-China trade war and the second wave of coronavirus infections remain major concerns.
  • Inflation in Germany is on the decline.

The EUR/USD is off to a weak bearish start on Friday with investors remaining uncertain about the economic situation. This is after the Federal Reserve Chairman Jerome Powell revealed that there was no plan to adopt negative interest rates contrary to expectations. The lack of directional momentum in either direction in the EUR/USD currency exchange rate highlights the uncertainty in the market.

The EUR/USD will likely trade long above 1.0819 if the price gains bullish momentum with resistance expected at the 1.0839, 1.0851, and 1.0875 price levels. If it turns bearish, then the price is expected to trade short below 1.0779 during the session with support expected at the 1.0759, 1.0748, 1.0727 levels.

EUR/USD outlook

The U.S dollar failed to gain against the Euro after reports that Germany, which is the largest European economy, is experiencing a slowdown in inflation. The level of inflation in the European country increased from 0.3% to 0.4% in April, which was better than anticipated. It managed to fall short of the level that the European Central Bank estimated and that means that the economy is doing better than expected. This may have provided some buoyancy for the Euro.

Meanwhile, the U.S and a few other countries are reportedly planning to ease restrictions on business operations that had been put in place to prevent the spread of the coronavirus. This move could provide more support to the dollar but there are a few other concerns. Investors are afraid that the move may result in a second wave of infections since there is still no cure. This could lead to further restrictions down the road and this may further affect the economy.

There are also concerns about the escalating trade tensions between China and the U.S as the trade war concerns gain momentum again. These factors may affect the economic recovery process, thus causing a significant impact on the EUR/USD performance.


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