CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

EUR/USD: USD drops following Fed’s dovish tone

Gains limited, economic data low-impacting for the remainder of the week.

EUR/USD Technical analysis, overview, strategies, and levels

The US Federal Reserve (Fed) was the item in focus yesterday, where it kept rates unchanged, projected no rate increases through 2022, maintained purchases with $80bn a month in Treasuries and $40bn in mortgage-backed securities, and expected the economy to contract by 6.5% this year but rise by 5% next year and 3.5% the year after that. The Fed will remain accommodative until unemployment comes back down, which it sees the unemployment rate at the end of this year at 9.3% and 6.5% by the end of next year. In the FX market, the US dollar was an underperformer, and yesterday’s EUR/USD 1st Resistance initially held in a relatively volatile session before eventually getting breached, aiding contrarian initially before giving conformist breakouts a chance. Overall, most of its main technical indicators continue to flash green.

IG client* and CoT sentiment for EUR/USD

As for sentiment, retail bias remains in heavy short territory, dropping a couple notches to 65%.

EUR/USD Chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am

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