Daily FX Research

As the Fed delivered no change on asset purchases Wednesday, the USD as disappointed leading to an initial spike higher in USD. With fed policy yet to translate into real negative US interest rates and further fiscal stimulus to come, there is more downside to come for the USD. USD weakness and no real intervention from the ECB will keep the EURUSD supported.

The Fed will "continue to buy Treasuries at a rate of at least $80Bn per month and agency backed securities at $40Bn per month until substantial further progress has been made towards the committees maximum employment and price stability goals". Powell said that while vaccine news was positive there was more the Fed could do to support the economy.

With US retail sales showing slowing momentum in the US economy and tighter restrictions likely in the future, the chances for further fiscal support are rising.

Technically, I'm watching the 1.2400 April 2018 resistance area. EURUSD could trade up to test this area in the short term. I remain bullish the EURUSD on any pullback towards 1.2200 for an extension higher.