EUR/USD: Hard times for the Dollar as US banking sector spooked the Fed
|The US currency just managed to limit the sharp loses it suffered in the wake of the 25 basis point increase in key interest rates, but mainly due to messages from President Jerome Powell.
The European currency was particularly favored by Fed's chairman dovish statements on the future prospects for further increases in key interest rates, which makes US bonds less attractive.
The decision was fully expected and there was no surprise and all the attention was focused on the Fed Chairman's speech after the decision, having now moved far away from the language he used a few weeks ago.
Αs shown by the latest developments with the crisis in the banking industry in the United States and the risks involved in this crisis taking on large proportions, it scared the Federal reserve bank and put the problem of inflation for the time being in the corner.
What is certain, however, is that we still cannot talk about a weak dollar, as at the levels it is , it remains at high prices, with the consequence that the margin for the rise of the European currency is still large.
In the previous attempt for the European currency to create a strong bullish Momentum in which it had approached the 1,10 level , I was quite sure that this Momentum could not be sustained for long , that is why i clearly suggested positions in favor to dollar on peaks.
Indeed the major correction that took the pair almost 500 pips lower to the 1,05 levels confirmed this strategy.
Now that the market has largely digested all levels and with the corrections in the pair as well as the strong reactions, I can't remain as confident that the US currency will again find a way to get back close to 1,05 easily.
So i will repeat my thought as I captured it two days earlier that buy on dips positions in favor to Euro gather a significant advantage, which after yesterday's developments seems to be expanding.
Nothing important is expected from today's agenda and the possibility of the US currency finding further supports is limited to the pressures that the stock markets may accept.
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