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US Dollar Price Outlook Talking Points:

We are fast approaching two very key Central Bank rate decisions with the ECB set to report on Thursday and the Federal Reserve on the economic calendar for next week. Both banks are expected to soften policy and this is already likely well priced-in to the matter; the bigger question is what each might do after that in Q4 of this year. Will the ECB talk up the prospect of QE? Will the FOMC at least acknowledge that this cut is more than a simple ‘mid cycle adjustment?’ And what will they say about policy going into 2020? This will be the bank’s first rate decisions since the July cut which means this will be the first release of updated economic projections via the SEP since the bank began softening policy. [1]

In the US Dollar - last week saw a gust of weakness take over in USD after the currency had rushed up to fresh two-year-highs to kick off September trade. USD[3] price action has now snapped back for a resistance test in a very familiar zone, taken from the 98.33 April swing-high up to the 98.50 level. This zone has now held resistance in April, May, August and now September.[2]

US Dollar Daily Price Chart: Resistance Holds in a Key Zone

us dollar daily price chart

Chart prepared by James Stanley; US Dollar on Tradingview[4][5]

EUR/USD Builds in Range, Drivers on Both Sides

Given the outlay of ECB this week leading into FOMC next week, and naturally the attention shifts to EUR/USD[6]. This may not necessarily be a ‘good’ thing as the pair’s price action has been in a trend-less state over the past week and it looks as

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