EUR/USD trades near a seven-week low after the Federal Reserve raised its target rate and signaled more tightening may follow. Technical charts point to a short-term rebound before a possible renewed decline toward 1.1417.
EUR/USD trades around 1.1459 on Thursday, close to a seven-week low, as the US dollar draws support from the Federal Reserve's latest rate hike. The FOMC unanimously raised the federal funds target range by 25 basis points to 3.75–4.00%, in line with market expectations, and signaled that further monetary tightening could follow later this year.
Fed signals more tightening ahead
Fed Chair Kevin Warsh noted that inflation remains too high. Data released last week also showed that core inflation accelerated more sharply than expected in August. Meanwhile, Donald Trump has once again called on social media for interest rates to be cut rapidly to 1% or lower, though he did not directly criticize Warsh.
Against this backdrop, markets continue to focus primarily on the Federal Reserve's own guidance and the likelihood of further rate increases. The Bank of England is due to announce its interest rate decision today, with rates expected to remain unchanged. Markets separately expect the Bank of Japan to raise rates on Friday.
Geopolitical pressure has eased somewhat as oil prices have fallen on hopes that Saudi Arabia can restore supplies through the East-West pipeline. This has provided some relief from inflation concerns, though it has not materially changed the broader hawkish outlook for monetary policy.
Technical picture points to a corrective bounce
On the H4 chart, EUR/USD has completed a downward move toward 1.1453. A corrective rebound toward 1.1494 cannot be ruled out in the short term. Once this correction is complete, the main scenario envisages another decline toward 1.1417.
The MACD indicator supports a short-term correction: its signal line remains below zero and near recent lows, suggesting the current downward momentum may be approaching a temporary pause. On the H1 chart, the pair has completed another move lower toward 1.1453, with a consolidation range now forming above this level. Today, a move higher toward 1.1494 is expected as part of the correction. The Stochastic oscillator supports this scenario, with its signal line above 20 and pointing firmly toward 80.
Source: ActionForex
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