The Fed raised interest rates by 50 bps and announced the start of QT on Wednesday as largely expected. Less anticipated were Fed Chair Powell’s comments discounting the near-term prospects of hikes greater than 50 bps at future meetings. US 2yr and 10yr yields fell as a result and EUR/USD eventually rose to an eventual high of 1.06420 in early morning trading before pairing back some of its gains. How does this shift in Fed calculus change the prospects for the euro?
From a technical perspective, one could argue by not much for the time being. EUR/USD, viewed on a weekly timeframe, is still very much locked in a downtrend with scope for an orderly retracement. More precisely, a sustained break above the last March swing high of 1.11849 would be required to signal an uptrend shift in price. Until then, swing traders are likely to be eyeing the 50% Fibonacci level of 1.08376 and 61.8% of 1.09233 as areas of resistance before considering potential for a bigger reversal.
Price action on lower time frames also suggest a bit of caution about the potential for substantial EUR/USD gains. In particular, the thirty-minute timeframe points to a rejection of the lower bound of the prior broken rising wedge, which suggests that buyer’s ability to push price higher at this junction may be limited. Eyes are now on whether the 3 May swing high of 1.05776 now turned support holds for confirmation of direction. That said, it may take a fall below the 1.05216 level, which represents the prior closing price of the break of the wedge pattern, to really entice sellers in a big way.
DISCLAIMER: All communication, messages, media and links distributed on this channel has been prepared by VARIANSE solely for information purposes without regard to any particular user’s investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but VARIANSE does not represent that it is accurate or complete. VARIANSE does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice. The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sales of any financial instrument. The information contained herein has no regard to the specific investment objects, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment decision. It is important to note that past performance is not indicative of future results. VARIANSE is a trading name of VDX Derivatives, authorised and regulated by the Financial Services Commission (FSC) of Mauritius. FSC license number C118023323. VARIANSE is also a trading name of VDX Limited and is authorised and regulated by the Financial Conduct Authority (FCA) in the United Kingdom. FCA register number 802012. This publication is not directed to residents of the United States and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
We are an award-winning, internationally regulated, trusted and secure broker.
Regulated Globally
VARIANSE is authorised and trusted internationally. We have entities regulated by the FCA, FSC and LFSA.
Multi-Award Winning
VARIANSE has achieved consistent recognition from independent organisations and the financial community.
Premium Customer Support
Take comfort in an experienced team committed to providing you with rapid, efficient, and friendly support.
Tier-1 Banking Relationships
We safeguard your funds safely and securely in segregated ring-fenced client money custodian bank accounts with Barclays Bank.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
We value your privacy
We use a range of cookies to give you the best possible browsing experience. By continuing to use this website you agree to our use of cookies. You can learn more about how we use cookies by accessing our privacy policy
