The EURUSD currency pair rebounded amid a cautious move towards the 1.1106 resistance level, before settling around 1.1085 at the beginning of trading today- Forecast
According to an official announcement, the US Federal Reserve raised its key interest rate for the 11th time in 17 months, a series of hikes aimed at curbing inflation but also carries the risk of going too far and triggering a recession. The move raised the Fed's benchmark short-term rate from about 5.1% to 5.3% - its highest level since 2001. In addition to previous interest rate increases, the Fed's latest move could lead to further increases in mortgage costs.
Today's ECB policy meeting may pressure more good news out of the EUR according to analysts who see a slowing economy and falling inflation as reasons to believe the July rate hike will be the last.
The euro was one of the best-performing foreign currencies in 2023 due to improved economic sentiment as the energy shock faded in 2022 and with higher interest rates from the European Central Bank boosting the attractiveness of eurozone assets. By raising interest rates by another 25 basis points today, Thursday, the ECB deposit rate will rise to 3.75% and MRO to 4.25%.
Ahead of the decision, we see that the Euro Trade Weighted Index - a broader measure of the euro's performance against a group of currencies - is near an all-time high.According to the performance on the daily chart below, the EUR/USD price is still in a bearish correction path, and as I mentioned before, moving below the psychological level of 1.1000 will give the bears more impetus to test stronger support levels.
Hints from the European Central Bank today for the future of tightening and the US economic growth figure will shape the performance of the Eurodollar for what will be the weekly close for the currency pair.
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