EUR/USD is under pressure around 1.19, as the dollar remains on the offensive following the Federal Reserve's hawkish decision on Wednesday. The bank is set to debate cutting down its bond buys and signaled raising rates sooner than anticipated.
GBP/USD has been extending its decline, sliding under 1.39. UK retail sales disappointed with -1.4% in May and the rapid spread of the Delta variant in the UK is also weighing on sterling. The US dollar remain robust after the Fed's hawkish decision.
XRP price remains locked in a range between the psychologically important $1.00 and the neckline of a multi-year inverse head-and-shoulders pattern at $0.76. However, a lack of technical clues leaves frothy forecasts on the sideline until directional confirmation can be gleaned from the charts.
The Fed surprised markets with an abrupt hawkish shift that has triggered substantial volatility in currency markets. Valeria Bednarik and Yohay Elam explain the surprise, discuss technical level, the next moves in FX and beyond.
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. The popularity of Euro Dollar is due to the fact that it gathers two main economies: Europe and the United States of America. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
The EUR/USD reached an all time high of 1.6038 in July 2008 and a record low of 0.8231 in October 2000.
"Social distancing, face-masks and remote working are part of a new normal that will likely continue through 2021. Monetary stimulus is here to stay and not just in Europe and the US. The pace of monetary stimulus will remain high as long as economies struggle with the virus and restrictions. An economic comeback could mean decreasing stimulus for 2021 and Wall Street may take the hit."
The organization that most impact has nowadays the EUR/USD is the Federal Reserve, the central banking system of the United States of America created with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the monetary system in order to alleviate financial crises. Jerome Powell is Fed's Chair, serving in that office since February 2018.
The Board of Governors (also known as the Federal Reserve Board) is carefully observed. The board meets several times per year and announces the interest rates. If rates remain unchanged, attention turns to the tone of the FOMC (Federal Open Market Committee) statement. Also particularly significant are the 12 Federal Reserve Banks that make up the Federal Reserve. These Federal District Reserve Districts issue their own statements and research data that give hints about the health of the US economy and might as well influence dollar-related currency pairs.
The US Government is as well an institution of great importance for the EUR/USD pair: events as administration statements, new laws and regulations or fiscal policy can increase or decrease the value of the US Dollar and the currencies traded against it.
Not only American institutions influence the EUR/USD pair, European too of course. And the number one organization is the European Central Bank, which is the central bank for the euro and administers monetary policy within the Eurozone, comprising 19 member states of the European Union and is one of the largest monetary areas in the world. ECB's main objective is to maintain price stability for the Euro while setting and implementing the monetary policy for the Eurozone (including interest rates). It also conducts foreign exchange operations and takes care of the foreign reserves of the European System of Central Banks. Christine Lagarde is ECB's President since November 2019.