EUR/USD Hits Fresh Two-Decade Low After Fed Hikes By 75 bps
Alex Boltyan | Sep 21, 2022 04:28PM ET
The EUR/USD pair tumbled to its lowest level since 2002 on Wednesday after the Federal Reserve decided to raise interest rates by 75 basis points for the third time in a row, taking the fed funds' range to 3.0%-3.25%, as expected.
The EUR/USD bottomed at 0.9812 as the knee-jerk reaction but bounced toward the 0.9900 area during Jerome Powell's press conference. At the time of writing, the pair is trading at the 0.9840 area, recording a 1.3% daily loss.
Chair Powell reinforced his hawkish rhetoric. He assured the FOMC's commitment to bring inflation down, stating that it is the Fed's sole job. He confirmed that ongoing data-dependent rate hikes may be appropriate and that the committee is willing to maintain the funds' rate at a restrictive level and keep them higher "for some time" to restore price stability.
According to the median projections and the so-called dot plot, the members of the FOMC are seeing the funds rate at 4.4% by the end of this year (1% higher than June's projection), 4.6% in 2023, 3.9% in 2024, and 2.9% in 2025. The PCE inflation forecasts where adjusted to 5.4% in 2022, 2.8% in 2023, 2.3% in 2024 and 2% in 2025.
From a technical perspective, the EUR/USD pair holds a short-term bearish bias according to indicators on the daily chart. The RSI and the MACD remain in negative territory while the price develops below its main moving averages.
On the downside, the 0.9812 low is the immediate support level. A break below this level could pave the way toward the 0.9700 area. On the other hand, short-term resistances line up at the 20-day SMA, currently at around 0.9983, followed by the parity level and the 1.0100 zone.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.