EUR/USD Trades Near Resistance After FOMC Meet
Gregor Horvat | May 05, 2022 04:35AM ET
It was an interesting day yesterday, with FOMC causing some trend reversal in the last two hours of US sessions. We are seeing some recovery on stocks while the US dollar is selling off due to less hawkish than expected Powell comments.
He said they have further hikes in view, but that data will be essential to track. So it appears they are not convinced regarding the 0.75% hike, while investors assume that data can be bad based on the latest economic reports. So this is a reason for the USD selling off while stocks found some support.
We have also seen a nice rise on the EUR/USD pair, but keep in mind that the main reasons for the EUR/USD bears are still here; ECB policy, the Russian-Ukraine conflict, and the Russian oil ban, which can have terrible consequences for the European economy as energy prices may continue to rise.
Technically speaking EURUSD pair remains in a downtrend as the drop from 1.1186 is not in five waves yet. Minor recovery is in three sub-waves, and it's moving into 38.2% Fib level so that it can be wave four as part of ongoing weakness.
We remain bearish as long as the market trades below 1.08, but a broken trendline can already be the first evidence of a change in trend. However, we will stick with bears that can reach 1.03/1.02 if 1.05 is broken.
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