EUR/USD Oscillates After Fed Hikes 75 Basis Points
2022.06.16 10:50
The EUR/USD pair oscillated sharply on Wednesday following the Federal Reserve monetary policy announcement.
The Federal Reserve decided to raise rates by 75 basis points taking the federal fund range to 1.5%-1.75%, the highest increase since 1994. Besides, the dot plot showed the median rate expected by the end of 2022 was 3.4%, paving the way for at least two or three more hikes this year.
The EUR/USD initially moved lower and struck a one-month low of 1.0358 before bouncing to levels above 1.0500 post Jerome Powell’s press conference.
Chairman Powell said that the labor market remains extremely tight and inflation high, so they considered a 75 basis point increase appropriate at the June meeting. He also said that either 50 bps or 75 bps rate hikes would be appropriate at the next meeting and remain data-dependent.
Despite the hawkish tone, the dollar turned lower alongside yields, while Wall Street indexes advanced following the presser.
Also worth mentioning, the European Central Bank called an urgent meeting on Wednesday and announced that it plans to create a tool to tackle the risk of eurozone fragmentation. The ECB said it would reinvest redemptions from its emergency bond-purchasing program (PEPP) flexibly.
EUR/USD daily chart.
The EUR/USD moved from a low of 1.0358 to a high of 1.0508 before settling at the mid-range around 1.0450. The short-term technical perspective remains negative for the EUR/USD, according to the daily chart.
The RSI remains below its mid-line, although it has turned flat, while the MACD shows decreasing red bars.
Now that the FOMC is behind, the pair could enter a consolidation phase. On the downside, key support is seen at the 1.0350 area, while significant resistance could be found at the 1.0520 zone.
