EUR/USD rebounds and soars above 1.0450 after Powell
|- US dollar tumbles during Powell’s press conference after Fed rate hike.
- EUR/USD back in recent range, looking now at 1.0500.
- Wall Street adds to gains, and Treasury yields decline.
The EUR/USD bounced from near the May low and jumped back above 1.0450. As Powell’s press conference ends, the pair is hovering around 1.0460, almost 70 pips above the level it had before the FOMC statement.
A weaker dollar boosted the EUR/USD from the four-week low at 1.0357. It is back in the weekly familiar range. A break above 1.0500 should strengthen the recovery of the euro. On the flip side, under 1.0390 a new test of the year-to-date low at 1.0345/50 seems likely.
Fed moves, traders sell the fact
At the end of the June meeting, the Federal Reserve decided to raise its target interest range by 75 basis points, the biggest move since 1994. In the statement, the Fed mentioned that more rate hikes are coming and warned about the increasing risks of a recession.
Fed Chair Powell mentioned he does not expect 75bp rake hikes to be common. He said the pace of rate hikes will depend on incoming data. Inflation developments warranted a bigger hike at the June meeting, Powell commented.
The dollar turned lower after his comments while Wall Street indices rose sharply. The Dow Jones is up by 1.27% and the Nasdaq gains 2.80%. Treasuries recovered with the US 10-year yield falling to 3.33%.
The improvement in risk sentiment and lower US yields pushed the dollar to the downside across the board. The DXY is falling 0.70%, the worst day in almost a month. The rally of the dollar is being challenged at the moment.
Technical levels
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