- The EUR/USD has rapidly reversed Wednesday's direction after getting knocked lower by Fed rate call.
- Fed keeps rates at 5.5%, but sees at least one more rate hike by the end of 2023.
- Markets have piled into the USD after the Fed updated its forward-looking rate expectations.
The EUR/USD is sharply off the day's highs of 1.0735, trading into the low end and chalking in a new low for Wednesday near 1.0650.
The Federal Reserve (Fed) updated their Summary of Projections (SEP), which shows Fed officials expecting the interest rate to hit 5.1% by the end of 2024 (previously 4.6%). Despite the Fed holding steady on rates at 5.5% for the time being, the uptick in the rate of interest rate cuts has sent the US Dollar broadly up across the board.
Read more:
Fed delivers a hawkish pause, promises higher for longer rates
Jerome Powell speaks on monetary policy after deciding to hold interest rate steady
Fed dot plot points to one more 25 bps hike in 2023 and 50 bps cut in 2024
Up next on the economic calendar, US Initial Jobless Claims are slated for Thursday at 12:30 GMT, and the figure is expected to print slightly higher at 225K versus the previous 220K.
Forex Today: US Dollar strengthens after Fed’s hawkish pause
Friday sees Purchasing Manager Index (PMI) figures for both the European Union (EU) and the US. EU Composite PMI is forecast to dip slightly to 46.5 from 46.7, while the US side is anticipating a minor improvement. The US Manufacturing PMI is expected to tick up from 47.9 to an even 48.0, while the Services component is anticipated at 50.6 versus the previous 50.5.
EUR/USD technical outlook
Wednesday's Fed-sponsored decline in the Euro-Dollar pairing sees the EUR/USD giving up most of the gains for the week, trading into the 1.0660 level after getting knocked back.
Price declines in the pair are starting to accelerate from a descending trendline on the daily candlesticks, marked in from July's swing high near 1.250.
The 200-day Simple Moving Average (SMA) also rests above current price action, turning flat near 1.0830.
Continued selling pressure from here will see the EUR/USD set to close in the red for a tenth straight week and set to challenge the year's lows currently marked in near 1.0500.
EUR/USD daily chart
EUR/USD technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
GBP/USD posts modest gains above 1.2650, focus on the Fedspeak
The GBP/USD pair posts modest gains near 1.2670 during the Asian session on Friday. Meanwhile, the USD Index recovers some lost ground after retracing to multi-week lows near 104.00 in the previous session.
Gold price gains ground, with Fed speakers in focus
The Gold price trades with a positive bias on Friday. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Fed.
LINK price jumps 10% as Chainlink races toward tokenization of funds
Chainlink price has remained range-bound for a while, stuck between the $16.00 roadblock to the upside and $13.08 to the downside. However, in light of recent revelations, the token may have further upside potential.
Fed speak tempers rate cut expectations
The biggest takeaway into Friday is the latest round of Fed speak. These Fed officials reiterated their stance rates should be kept restrictive for a longer period of time until there is more clear evidence inflation is heading back towards the 2% target.