EUR/USD: Sustained Growth Momentum or Pullbacks Ahead?
The EUR/USD currency pair is experiencing slight declines while still holding above the 1.0800 level, following an initial upward move towards the 1.0850 region. The pair is consolidating its losses as the US Dollar bulls take a break following the recent surge prompted by the Federal Reserve's hawkish stance. Traders are closely watching the upcoming European Central Bank (ECB) policy announcements.
Despite the US Dollar's recovery after the Federal Open Market Committee (FOMC) meeting, the EUR/USD managed to close at its highest level in a month above 1.0800. The focus now shifts to the ECB's Governing Council meeting and upcoming economic data from the US, which could hold greater significance following Fed Chair Powell's statement that the July meeting will be a live one.
The ECB's interest rate decision is anticipated to result in a 25 basis points hike. Market participants will closely analyze the language used in the statement as well as ECB President Lagarde's comments during the subsequent press conference. It is likely that President Lagarde will reiterate that the ECB is not finished with its rate hikes. If the meeting turns out to be more dovish, signaling a potential pause, it could put pressure on the Euro.
The US Dollar regained strength after the FOMC meeting, where interest rates were kept unchanged but indications were given that the rate-hiking cycle is not over. This hawkish tone had an impact on Treasury bonds and provided support for the greenback. Fed Chair Jerome Powell emphasized that the July meeting will be a "live meeting," leaving the possibility of further rate hikes on the table. According to the projections, most FOMC members foresee an additional 50 basis points of tightening by the end of the year.
During the Asian session, market participants will continue to digest the Fed's decision, which is likely to remain a key driver of market sentiment until the ECB meeting. Additionally, important economic data from the US, including Retail Sales, Jobless Claims, and the Philly Fed Index, are scheduled for release on Thursday. Our current outlook suggests a potential short setup following a rebound at the 78.6% Fibonacci retracement level, indicating a possible downward move. This presents an opportunity for bearish traders, but a sustained price increase could eliminate the chances of a short-side pullback.
Despite the US Dollar's recovery after the Federal Open Market Committee (FOMC) meeting, the EUR/USD managed to close at its highest level in a month above 1.0800. The focus now shifts to the ECB's Governing Council meeting and upcoming economic data from the US, which could hold greater significance following Fed Chair Powell's statement that the July meeting will be a live one.
The ECB's interest rate decision is anticipated to result in a 25 basis points hike. Market participants will closely analyze the language used in the statement as well as ECB President Lagarde's comments during the subsequent press conference. It is likely that President Lagarde will reiterate that the ECB is not finished with its rate hikes. If the meeting turns out to be more dovish, signaling a potential pause, it could put pressure on the Euro.
The US Dollar regained strength after the FOMC meeting, where interest rates were kept unchanged but indications were given that the rate-hiking cycle is not over. This hawkish tone had an impact on Treasury bonds and provided support for the greenback. Fed Chair Jerome Powell emphasized that the July meeting will be a "live meeting," leaving the possibility of further rate hikes on the table. According to the projections, most FOMC members foresee an additional 50 basis points of tightening by the end of the year.
During the Asian session, market participants will continue to digest the Fed's decision, which is likely to remain a key driver of market sentiment until the ECB meeting. Additionally, important economic data from the US, including Retail Sales, Jobless Claims, and the Philly Fed Index, are scheduled for release on Thursday. Our current outlook suggests a potential short setup following a rebound at the 78.6% Fibonacci retracement level, indicating a possible downward move. This presents an opportunity for bearish traders, but a sustained price increase could eliminate the chances of a short-side pullback.
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