Euro is trading little changed from the early January levels, demonstrating a neutral dynamics. On the weekly charts, EURUSD is stuck between the 100- and 200-SMAs and continues to trade within a limited range. But the general dollar weakness suggests the common currency could resume the rally after the current retreat. To make a new bullish breakthrough, the pair needs to settle firmly above the 1.15 handle – as long as the price is below this level, the risk of challenging the key immediate support at 1.14 persists.
On the one hand, dollar safe-haven demand is getting weaker due to a political chaos in the US and the aggressive Trump’s internal and foreign policy. There is some progress in the trade talks with China, but lack of details and official arrangements makes investors nervous. However, this factor is not able to bring buying impetus for the greenback as the currency is focused on a more ‘dovish’ Federal Reserve rhetoric.
Now, when the Fed has put its cards on the table, it is interesting to see how the ECB will react to the incoming bearish signals from the regional and global economy. The central bank’s assessment of economic risks is the key for the euro now, and any hints at a delay in the first rate hike could derail the euro’s bullishness in the medium term.