Market News & Analysis

Top Story

Will the Feds cut help the EUR pop?

In our last article on the EURUSD written back on February 19th, we asked how low could the EURUSD go, after it fell quickly from just below 1.1100 to 1.0800. As a result, oversold readings were at extreme levels and our thoughts were the EURUSD would launch a countertrend rally from the trendline support coming in 1.0750ish.

This played out broadly as expected as the EURUSD reached our 1.0880/1.0920 bounce target five days later, before surging higher again as last week’s violent fall in equity markets and accompanying sharp rise in volatility forced traders to unwind short EUR FX carry trades.   

The Feds overnight intermeeting 50bp cut brings the EURUSD back into focus. Although the Feds rate cut is viewed as part of a coordinated round of easing’s, the U.S. dollar sagged because the Fed quite simply has more room to cut again. It could conceivably take rates all the way back to zero whereas other key central banks are already there and have just pea shooters and cap guns left in their conventional monetary policy armory.

As can be viewed on the chart below, the EURUSD after completing a v-shaped bottom at the 1.0778 low is now testing trend channel resistance, which if we are brutally honest has been a burial ground for past EURUSD rallies.  Importantly we are still waiting on the ECB’s response to the Covid-19 epidemic which depending on the balance of fiscal vs monetary, is likely to determine if the EURUSD fails again or makes a clean break for the hills.

In this regard price action will be important. Should the EURUSD break and post two consecutive daily close above trend channel resistance and year to date highs, let's say 1.1260ish to give it some room, a move towards 1.1600/1.1800 is likely to unfold and the catalyst to consider EURUSD longs. Until that occurs allow for the possibility of another round of EURUSD failure.

Source Tradingview. The figures stated areas of the 4th of March 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.