The currency pair is stabilizing around 1.0426 on Thursday as investors assess recent developments and prepare for the upcoming European Central Bank (ECB) meeting.
Key Market Influences
The Federal Reserve, as anticipated, maintained its interest rate at 4.5% per annum. In its statements, the Fed reiterated its intention to reduce its balance sheet at a rate of $25 billion per month. Fed Chair Jerome Powell remarked that the interest rate does not need to decrease to 2% before contemplating cuts. He also endorsed banks providing cryptocurrency services, indicating a readiness for financial innovation.
Powell emphasized that the Fed is not in a hurry to reduce interest rates as it closely tracks stock market valuations, expressing concerns over potential overvaluation of certain assets. Notably, Powell refrained from addressing US President Donald Trump’s recurrent demands for immediate rate reductions.
Recent reports have suggested that Trump may advocate for a system where US presidents can influence interest rate decisions. Despite the Fed’s current independence, this topic may resurface in political debates.
Technical Analysis of EUR/USD
On the H4 chart, EUR/USD has declined to 1.0382, suggesting a corrective wave towards 1.0437. Once this correction concludes, the pair is expected to continue its downturn, targeting 1.0345 initially. A brief correction may occur towards 1.0437 before the downtrend potentially reaches 1.0050. The MACD indicator supports this outlook, with its signal line above zero but trending downward, indicating a bearish momentum.
On the H1 chart, the pair consolidated around 1.0437 before breaking lower to hit a local target at 1.0382. A corrective move back to 1.0437 is now probable before the pair resumes its decline towards 1.0345, with a potential extension down to 1.0160. The Stochastic oscillator supports this scenario, showing its signal line above 80 but trending downward towards 20, indicating further losses are likely.
Conclusion
The EUR/USD pair remains steady following the Fed’s policy announcement, with focus shifting to the ECB’s upcoming meeting. The Fed’s cautious approach to rate cuts provides support for the USD, while uncertainties regarding Trump’s possible influence on monetary policy add complexity to the situation. Technical indicators suggest further downside potential for EUR/USD, targeting 1.0345 and 1.0160. Future movements will largely depend on the ECB’s policy outlook and general market sentiment.
By RoboForex Analytical Department
Disclaimer
The forecasts provided herein represent the author’s individual perspective. This analysis should not be construed as trading advice. RoboForex assumes no responsibility for trading results based on the recommendations and reviews provided herein.
