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The pair EUR/USD has benefited greatly from the Fed meeting yesterday evening, which has generally been regarded as an event dovish by traders.
The FOMC has as expected left rates unchanged, in line with what was quite clearly pre-announced, but some details in the about Powell have attracted the attention of investors.
The boss of the Fed, in effect, has specified that according to him, inflation will have to overshoot “significantly and persistently” the official target for the Fed is considering to raise rates. In addition, the graphical dot-plot made to date has shown that no member of the Fed does not anticipate rate increases in the next year.
This position of the boss of the Fed leaves the door open to what the market believes that it is more likely that the Fed lowers its rates next year rather than the back, which has had a negative impact on the greenback, pushing mechanically EUR/USD to the upside.
Technical thresholds to monitor on EUR/USD
From a technical point of view, it should be noted that the barrier of the psychological threshold of 1.11 was achieved, thanks to the rise of yesterday. EUR/USD now faces the 200-day moving average located at 1.1155, and that is the next hurdle to overcome to further strengthen the profile uptrend of the Euro-Dollar.
In this case, the next potential target will be the area of 1.1180-1.12.
In the event of a decline in EUR/USD, it should be noted that the threshold of 1.11 will be the first support to monitor, but the trend will remain positive as long as the moving average 100 days now at 1.1065 is conserved.
Below this threshold, a return on the threshold of major psychological of 1.10 would become possible.
The meeting of the ECB at the centre of attention this Thursday
Finally, it should be noted that the main event would potentially affect the Euro this Thursday will be the ECB meeting. As for the Fed last night, no movement in rates is expected, but the fact that it is the first press conference by Christine Lagarde in her new role of head of the Central Bank as a result of this event, a potential risk for the markets in general and the Euro in particular.
The difference of language between Lagarde and his predecessor, Mario Draghi will be analyzed closely, especially as it is not excluded that Lagarde, with little experience to manage the market response, make a false step or slip, especially if it addresses the fact that the ECB still has leeway to lower rates. If the market interprets his words as a signal that the ECB is tientprête to doze off again, the Euro could fall.