Since mid-trading this week, the price of the EUR/USD currency pair has been trying to rebound higher. Obviously, the momentum for this increased yesterday as the US Federal Reserve concluded its two-day meeting and decided to leave US interest rates unchanged. Clearly, this is a strong signal that there will be a less hawkish stance next year, with the possibility of three rate cuts through 2024. As a result, the EUR/USD currency pair jumped to the resistance level of 1.0888 after the decision.
In general, US interest rates were left unchanged at 5.25% to 5.5%, although they remain at their highest levels in two years. Since March 2022, the Federal Reserve has raised interest rates by 525 basis points. Meanwhile, this move was in line with expectations. Before the bank's decisions, US Treasury Secretary Janet Yellen said that "inflation is coming down in a beneficial way" and saw "no reason why inflation should not fall to the Federal Reserve's target." Also, She pointed out that the labor market has remained "strong, but has cooled."
Concurrently, Yellen said that she expects US inflation to fall within 2% by the end of next year, and for the Federal Reserve to hold its meeting. For its part, Reuters said, “So over time, I think people will feel better about the economy,” although it said that consumers are still aware of rising rental prices and other things. Despite the textual nature of Yellen's comments ahead of the Fed meeting, the former Fed chair said she would "leave that call to them," noting: "They have risks to manage." One is that inflation does not return to their target as they envisioned, and the other is that the economy becomes very weak.”
On the economic side, the US Consumer Price Index (CPI) rose by 3.1% year-on-year, despite the decline in the cost of gasoline. Obviously, the rally was largely driven by an increase in rents - another prominent measure indicating that the US Federal Reserve was unlikely to move to cut interest rates in the near term. Last Friday, the US Labor report showed an acceleration in job gains in November, as unemployment in the country fell to 3.7%, down from 3.9% (the highest level in two years) in October.
From the Eurozone, seasonally adjusted European industrial production for October exceeded the expected change of -0.3% with a change of -0.7%. also, The equivalent (on an annual basis) fell below the expected change of -4.6% with a change of -6.6%. Before that, the European Union's ZEW Economic Sentiment Survey exceeded expectations of 12 with a reading of 23. On the other hand, the German ZEW Current Situation Survey exceeded -75.5 with a reading of -77.1, while the ZEW Economic Sentiment Survey surpassed 8.8 with a reading of 12.8.
EUR/USD technical Analysis Today:
Currently, the price of the EUR/USD has retreated to trade near the 100-hour moving average line. However, it seems that the currency pair still has a lot of room to rise before reaching the oversold levels of the RSI 14-hour. In the near term, and according to the performance on the hourly chart, it appears that the EUR/USD is trading within an ascending channel formation. However, the 14-hour RSI has pulled back recently to avoid a rally in overbought conditions. furthermore, the bears will target extended pullbacks at around 1.0820 or lower at the 1.0760 support. On the other hand, the bulls - the bulls - will be looking to pounce on profits at around 1.0890 or higher at 1.0927.
In the long term, and according to the performance on the daily chart, it appears that the EUR/USD currency pair is trading within a descending channel. However, the 14-day RSI appears to have rebounded recently to avoid falling into oversold conditions. Therefore, the bears will look to extend the current bounce towards 1.0893 or higher to the 1.1012 resistance. On the other hand, the bears will target long-term profits at around 1.0700 or lower at the 1.0562 support. After interacting with the US Central Bank’s decision, the Euro/Dollar will have an important date today, as the European Central Bank will announce the update of its monetary policy. Also, in this important meeting, as expectations have increased recently that the European Central Bank will be the first to reduce interest rates in the year 2024.
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