The US Federal Reserve gave the greenback the last push, and the American currency finally fell over the cliff. The US Central Bank decided to downgrade its growth forecast for this year, revising GDP down to 2.2% from previous 2.4%. More relevant, the dot plot shows that policy makers have now the intention of rising rates just two more times this year, from previous four. Given that the FED has been largely overestimating the economic developments, market players saw an even darker picture and the dollar got sold-off.
Ahead of the release of the EU trade balance and latest inflation readings, the EUR/USD flirts with the 1.1300 level, its highest in over a month. And while the European future seems not that bright, the ongoing negative sentiment towards the dollar may see the pair advancing further ahead of the weekend.
View the Live chart of the EUR/USD
From a technical point of view, the 4 hours chart shows that the pair regained upward momentum after a limited consolidative stage, and that the technical indicators have accelerated through overbought levels, maintaining their upward slopes. Additionally, the price has broken above its 20 SMA with the FED's announcement, now turning north, but lagging. Anyway, the immediate support comes at the 1.1240/50 region, and as long as buying interest surges around this area, the upside is open towards 1.1375, the high set last February. Further gains beyond point to a test of 1.1460, a major long term static resistance, from where the pair retreated for most of the past 2015.
Should the decline accelerated below the mentioned support of 1.1245 on the other hand, the pair can correct lower, down to 1.1200 first, and 1.1160 then.
Latest updates on the EUR/USD Forecast
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