The value of EURUSD at 1.06390 continues to decline because of the Federal Reserve’s forecast of a potential interest rate increase in 2023.
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- EUR/USD extends losses due to Fed’s projection on rate hike in 2023
The pair currently trades last at 1.06390.
The previous day high was 1.0737 while the previous day low was 1.065. The daily 38.2% Fib levels comes at 1.0683, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0704, expected to provide resistance.
EUR/USD continues the losing streak for the third successive day, trading lower around 1.0640 during the Asian session on Thursday. As anticipated, the US Federal Reserve (Fed) opted to keep the existing benchmark policy rates unchanged at 5.5% during the meeting held on Wednesday.
Fed projected an additional rate hike in 2023, which reinforces the downward pressure on the EUR/USD pair. Moreover, in its monetary policy statement, the Federal Open Market Committee (FOMC) has revealed its expectation for slightly elevated inflation compared to its previous forecasts.
While the monetary policy statement largely mirrored the previous decision, the sudden strengthening of the US Dollar (USD) was primarily attributed to the Federal Reserve officials’ unexpected upward revision of their projected interest rates for 2024, increasing them from 4.6% to 5.1%.
This adjustment played a crucial role in the rapid appreciation of the Greenback against the Euro. US Dollar Index (DXY) extends its gains and trades a six-month high of around 105.50 at the time of writing.
Elevated US Treasury yields helping the buck to rise. The yield on 10-year US note rose to 4.43% by the press time, the highest since 2007.
In a press conference conducted right after the rate call, Fed Chair Jerome Powell reaffirmed the Fed’s commitment to reaching its long-term inflation target of 2%.
Powell mentioned that the central bank is likely approaching the peak of its interest rate hike cycle but emphasized that future policy decisions would be data-driven.
On the other side, the Euro is under pressure since the European Central Bank (ECB) has communicated a clear signal that its 14-month-long policy tightening cycle may have reached its zenith, as it has elevated its main interest rate to an unprecedented level of 4%.
Furthermore, the downward revisions of CPI and GDP growth projections for the upcoming years, specifically 2024 and 2025, have reinforced the notion that additional rate hikes may not be on the immediate horizon.
The traders of the EUR/USD pair will likely watch Thursday when more US data is due with the weekly Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, and Existing Home Sales Change. On the Eurozone docket, preliminary Consumer Confidence and ECB’s President Lagarde’s speech will be eyed.
Technical Levels: Supports and Resistances
EURUSD currently trading at 1.0638 at the time of writing. Pair opened at 1.066 and is trading with a change of -0.21 % .
| Overview | Overview.1 | |
|---|---|---|
| 0 | Today last price | 1.0638 |
| 1 | Today Daily Change | -0.0022 |
| 2 | Today Daily Change % | -0.2100 |
| 3 | Today daily open | 1.0660 |
The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.0753, 50 SMA 1.0908, 100 SMA @ 1.0885 and 200 SMA @ 1.0829.
| Trends | Trends.1 | |
|---|---|---|
| 0 | Daily SMA20 | 1.0753 |
| 1 | Daily SMA50 | 1.0908 |
| 2 | Daily SMA100 | 1.0885 |
| 3 | Daily SMA200 | 1.0829 |
The previous day high was 1.0737 while the previous day low was 1.065. The daily 38.2% Fib levels comes at 1.0683, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.0704, expected to provide resistance.
Note the levels of interest below:
- Pivot support is noted at 1.0628, 1.0596, 1.0541
- Pivot resistance is noted at 1.0715, 1.0769, 1.0802
| Levels | Levels.1 |
|---|---|
| Previous Daily High | 1.0737 |
| Previous Daily Low | 1.0650 |
| Previous Weekly High | 1.0769 |
| Previous Weekly Low | 1.0632 |
| Previous Monthly High | 1.1065 |
| Previous Monthly Low | 1.0766 |
| Daily Fibonacci 38.2% | 1.0683 |
| Daily Fibonacci 61.8% | 1.0704 |
| Daily Pivot Point S1 | 1.0628 |
| Daily Pivot Point S2 | 1.0596 |
| Daily Pivot Point S3 | 1.0541 |
| Daily Pivot Point R1 | 1.0715 |
| Daily Pivot Point R2 | 1.0769 |
| Daily Pivot Point R3 | 1.0802 |
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