EUR/USD rises to the highest in almost two months, near 1.1450
- US dollar drops sharply after FOMC meeting, DXY heads for the lowest close since February.
- Euro consolidate gains versus the greenback, rises further against the pound.
The EUR/USD jumped from 1.1355 to 1.1447, reaching the strongest level since February 4. Afterward pulled back modestly and near the end of the session was hovering around 1.1440, up 80 pips for the day, having the best performance since January.
The rally started after the Fed’s meeting that triggered a decline of the US dollar across the board. The central bank kept rates unchanged as expected and the FOMC staff projections signaled no rate hike for 2019. “Markets were universally poised for a very benign outcome, and the Fed dutifully delivered, their message overall matching the most dovish of expectations”, said Richard Franulovich, Head of FX Strategy, at Westpac. The Fed announced the end of the balance sheet reduction in September.
After the meeting, equity prices rose and US yields tumbled. The 10-year dropped to 2.535%, the lowest in over a year, adding pressure to the greenback.
The rally of EUR/USD was capped below 1.1450 that has become the key resistance ahead of the Asian session. The euro still holds a positive tone and the main risk ahead appears to be UK PM May’s speech to be delivered in a few minutes. If the pound reacts negatively, a sharp slide in GBP/USD could send EUR/USD lower.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
