Bearish view
Top Regulated Brokers
Sell the EUR/USD pair and set a take-profit at 1.1372.
Add a stop-loss at 1.1550.
Timeline: 1-2 days.
Bullish view
Buy the EUR/USD pair and set a take-profit at 1.1550.
Add a stop-loss at 1.1372.
The EUR/USD exchange rate jumped to its highest level since July 16 as investors reacted to the latest Federal Reserve decision. It jumped to a high of 1.1468, up by 1.28% from the lowest level this year, with focus now shifting to the coming macro data from the US and Europe.
Federal Reserve Decision and Key Macro Data
The EUR/USD pair jumped as the Federal Reserve delivered its interest rate decision. Officials left interest rates unchanged between 3.50% and 3.75% as most analysts expected.
However, three Fed officials voted to hike interest rates, possibly citing the elevated inflation. As a result, odds that the bank will hike interest rates later this year jumped on Polymarket and Kalshi.
The bond market also reacted to the Fed decision, with the two-year rising to 4.33% and the ten-year hitting 4.68%. It is hovering near the year-to-date high of 4.715%.
At the same time, the US stock market dived, with the Dow Jones Index dropped by over 800 points. The Nasdaq 100 and S&P 500 indices were also in the red, while the CBOE VIX Index jumped by nearly 10% to $19.86.
The next key catalyst for the EUR/USD pair will be the upcoming European GDP data. Economists expect the bank to show that the economy expanded by 0.5% in the second quarter. If this happens, it will be a rebound from the first quarter’s growth rate of 0.3%.
Eurostat will also publish the latest unemployment rate, industrial, and business sentiment numbers.
The other key EUR/USD news to watch will be the US GDP and Personal Consumption Expenditure (PCE) numbers. Economists expect the data to show that the economy expanded by 2.3% in the second quarter after growing by 2.1% in Q1.
EUR/USD Technical Analysis
The EUR/USD pair jumped after the Federal Reserve interest rate decision. It moved to 1.1468, the upper side of the horizontal channel, which is part of the bearish flag pattern.
The pair has also hit the 50-day Exponential Moving Average (EMA), a sign that bears remain in control for now. It has also remained below the Supertrend indicator.
Therefore, the combination of a hawkish Fed, moving averages, and the bearish flag pattern points to a retreat, potentially to the lower side of the channel at 1.1372.