EUR/USD breaks above 1.1800 after Fed meeting
|- EUR/USD extends gains post-Fed.
- US yields drop further weakening the USD.
The EUR/USD pair broke above 1.1800 some minutes after the release of the FOMC statement. It reached at 1.1822, a 1-week high. It was holding near to top, consolidating above 1.1800, having the best day since November 14. Since the decision, the euro gained more than 50 pips.
Fed delivers hike and keeps line in projections
The Fed as expected rose rates by 25bp to 1.25-1.50%. “Both the Chicago and Minneapolis Fed presidents dissented. Next year, they will not vote, and this will give the Fed a slightly more hawkish bias among voting members in 2018. Although it remains a bit of a mystery for Fed officials, Yellen was clear that the recent softness is thought to be transitory”, said analysts from Brown Brothers Harriman. According to the projections, the FOMC expects three rate hikes during 2018.
During the press conference, Janet Yellen mentioned that it could take a longer period of a very strong labour market for inflation to reach the 2% target. She said that they believe 'surprising' softness in inflation is related to transient factors.
The greenback continued to slide during the press conference. The US Dollar Index dropped to a 1-week low at 93.3.
For a moment, EUR/USD received a boost from a rally in EUR/GBP. The pound spiked lower after British lawmakers defeated Prime Minister Theresa May's government on Wednesday, voting to change her Brexit blueprint. The pound then recovered most of the lost ground.
EUR/USD Technical levels
To the upside, the FXStreet's technical confluence indicator shows resistance levels at 1.1820, 1.1835 and 1.1870. On the downside, supports might now be seen at 1.1800, 1.1760 (Dec 11 low) and 1.1730 (Dec 13 low).
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