EUR/USD: the Fed dampens hopes for a quick recovery

The EUR is keeping its short-term advantage over the USD today, following a new meeting of the Fed's Monetary Policy Committee. The Fed did most of the heavy lifting, reaffirming its full support for the economy, no matter what, while reiterating that the recovery will be a "long road". The monetary institution headed by Powell presented its new outlook for the U.S. economy. This year, a fall in GDP of 6.4% is considered, with a powerful rebound next year (+4.9%). As for the unemployment rate, it is forecasted at 9.2% by the end of this year.

Hopes of a very rapid recovery in the US, despite its reputation as the world's leading economy for resilience, have been dashed. All the more so as the virus is still at a worrying stage in the US. According to data compiled by the authoritative John Hopkin University, the symbolic mark of 2 million cases has been reached, with nearly 112,400 deaths. The number of new cases per day, a key statistic for assessing the progress of the epidemic, is not diminishing and remains around 19,000 daily cases.

As of right now, the euro is trading at $1.1351.

KEY CHARTS

After crossing the upper bound of a range without any hesitation at the end of last month, on the basis of accelerated volatility and subsequent upward extension, the pair released significant potential for buying energy, until it returned almost to its early March highs. For the time being, a breathing phase, in the form of consolidation during the course of definition, is expected.

MEDIUM-TERM FORECAST

In view of the above things we've mentioned, our opinion is neutral in the medium term on the eurodollar.

We will maintain this neutral view as long as the pair is positioned between support at $1.1110 and resistance at $1.1440.