EUR/USD has been showing high volatility in the forex on Wednesday, initially soaring to a high at 1.0865, before plunging down to 1.0865. a hollow at 1.0802 which the currency pair remains close to this Friday morning.
Recall that the EUR/USD had progressed. in the first part of the day, facing the anticipation of a dovish Fed. Indeed, Tuesday’s CPI and Wednesday’PPI figures both came out below the consensus, which cemented the 2018 CPI figures. expectations of a pause in rate hikes, to the detriment of the Dollar and to the benefit of the EUR/USD.
EUR/USD shows a mixed reaction to the negative pressure. the Fed's hawkish surprise
However, the Fed ultimately provided a hawkish surprise. Indeed, although it has refrained from raising rates, like the market; foreseen it, the update; day of the dot-plot chart (which depicts Fed members' rate forecasts) suggests that 2 more rate hikes will take place before the end of the year.
In this context, the Dollar strengthened significantly, and the EUR/USD pair canceled out; a large part of his earnings. However, the currency pair is still higher on Thursday morning than it was early Wednesday morning.
Thus, we can consider, despite volatility around the event, which last night’s Fed meeting did not penalize EUR/USD, although the central bank was more hawkish than expected.
This is explained first of all because the market knows very well, from experience, that dot-plot forecasts are not carved in stone, and can quickly change depending on economic data.
However, the financial markets have seen signs of disinflation appearing and there are good reasons to believe that this will continue. Even for the month of July, where a rate hike was quite clearly communicated by the Fed, the market only assesses the chances of this happening at around 60% as investors seem to anticipate that deeper signs of economic weakness are inevitable and will deter the Fed.
Furthermore, we can assume that the market I don't see much difference between 5.1% and 5.6%, if there is any degree of of confidence in the proper functioning of the economy. And at In this regard, the news recent has shown that China wants to stimulate its economy, while the artificial intelligence boom takes care of stimulating the markets, relegating the Fed to the background. ECB Union and US Retail Sales on Thursday
As for the day on Thursday, forex traders interested in EUR/USD will mostly be watching the ECB meeting, for which a rate hike of 25 basis points is widely anticipated.
However, as has been In the case of the Fed, the influence of the ECB meeting on the markets will be mainly determined by the clues that the central bank provides for its next decisions.
If the ECB suggests that rate hikes will continue at foreseeable horizon, the Euro could strengthen further against the Dollar. À Conversely, if the ECB plans to follow the Fed’s lead with a pause, it will be expected to slow down. see EUR/USD pull back.
In the United States, the main potentially influential statistic on the Euro Dollar will be retail sales in May, expected in May. 2:30 p.m., at the same time as unemployment claims and the Philadelphia Fed index.
>> Find in real time the results of important statistics for EUR/USD as soon as they are released thanks to the Investing.com economic calendar!
Technical thresholds at monitor on EUR/USD
From a graphical point of view, we note that despite the post-Fed correction, the EUR/USD pair came to a low; cross the threshold of 1.08 and the 100-day MA (1.0803), and remains above these thresholds this Thursday morning.
If EUR/USD returns below the 1.08 area and takes a downward path, the psychological level of 1.07 and last week’s low at 1.07 will be lower. 1.0635 will be the first potential bearish targets.
À the upside, yesterday's high at 1.0865 is the first hurdle, before 1.09, then 1.10 and finally the 2023 yearly high at; 1.1095.
EUR/USD: The Fed had little impact despite a spike in volatility, focus on the ECB