The EUR/USD exchange rate retreated to a multi-week low last week after the Federal Reserve delivered its interest rate decision on Wednesday. It retreated to a low of 1.1423, down sharply from the year-to-date high of 1.2083.
Top Regulated Brokers
Hawkish Fed, ECB Decisions, and Iran Strait of Hormuz Closure
The EUR/USD pair has been in a downward trend in the past few months, a trend that continued last week after the Federal Reserve delivered its interest rate decision.
In a statement on Wednesday, the Fed decided to leave interest rates unchanged between 3.50% and 3.75%. The most notable aspect of the meeting, however, was that officials hinted that the bank will hike interest rates later this year. The dot plot showed that nine officials expect this to happen, citing the elevated inflation.
The statement came a few days after the European Central Bank (ECB) decided to hike interest rates by 0.25%. Christine Lagarde and her team believe that the bank will hike again if inflation continues rising. She will provide more hints about this in a statement on Monday.
The EUR/USD pair will next react to the upcoming US and European flash manufacturing and services PMI numbers, which will provide more color on the state of the respective economies.
The other crucial data to watch will come out on Thursday when the US releases the latest Personal Consumption Expenditure (PCE) inflation and GDP reports. A recent report showed that the economy expanded by 0.5% in the first quarter. The other key data to watch will be the US jobless claims, durable goods orders, and personal income data.
In addition to this, the pair will react to the new developments in Iran, where the country decided to close the Strait of Hormuz. This closure led to an increase in oil prices in perpetual futures contracts platforms.
EUR/USD Technical Analysis
The EUR/USD pair has pulled back in the past few months as investors have moved to the safety of the US dollar. It dropped from a high of 1.2083 in January to a low of 1.1410.
The pair has moved below the 50-week Exponential Moving Average (EMA). Also, the two lines of the Percentage Price Oscillator (PPO) have continued falling and is approaching the zero line.
The most likely scenario is where the pair continues its downward trend and reaches the key support of 1.1350. On the other hand, a surge above the key resistance at 1.1525 will invalidate the bearish outlook.
Ready to trade our weekly forecast? We’ve shortlisted the best European brokers in the industry for you.