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USD Continues To Lag Vs The Majors

The forex action has been hot today, with rate-cut mania hitting the USD hard. Going into the final few hours of the Monday forex session, the Greenback is lagging vs the majors. One of the biggest movers has been the EUR/USD. Rates are back above the 1.1150 level and driving higher.

From a pragmatic standpoint, it’s all about the FED cutting rates. Check out how the odds of future rates cuts have shifted over the past seven days:

Fed Meeting                             Current Odds of ¼ Point Cut         Last Week’s Odds

March 18                                                   100.0%                                                       0.0%

April 29                                                      72.9%                                                         0.0%

June 10                                                       38.5%                                                        0.0%

At this point, the big money is betting that the FED is going to aggressively cut rates in the next three months. As a result, the USD is getting pounded vs the majors. Against the EUR, seven-day losses are in the neighborhood of 400 pips, taking rates to late-December 2019 levels.

A Steep 7 Day Rally For The EUR/USD

Don’t look now, but the EUR/USD is on the bull. No doubt, rate-cut mania is hammering the Greenback as FED quantitative easing appears to be the order of the day.

EUR/USD, Daily Chart
EUR/USD, Daily Chart

For the EUR/USD, there is one interesting level on my radar:

  • Resistance(1): December 2019 High, 1.1239

Bottom Line: Until elected, I will have sell orders in the queue from 1.1234. With an initial stop loss at 1.1259, this trade produces 25 ticks on a solid 1:1 risk vs reward ratio.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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