Investors' heartbeat was finally answered after the outcome of the FOMC meeting earlier this morning which saw a significant strengthening of the US dollar after moving flat since the beginning of the week.
The Federal Reserve (Fed) in its latest policy meeting still maintained interest rates as well as current policies, yet investors got a clearer indication with the Fed’s hawkish tone on future economic projections.
7 Fed officials expect a rate hike in 2022, while another 13 expect a rate hike in 2023. Fed Chairman Jerome Powell said the updated projections are based on faster inflation rate growth than the central bank expects.
Now the price movement is clearer on the chart of the EUR/USD currency pair which is exhibiting a bearish trend with the expectation of further strengthening of the US dollar until next week.
Having flattened above the support level of 1.20900 after a decline at the beginning of the week, investors have seen the price plunge through the support zone 1.20900-1.20600 up to the level of 1.2000.
The daily decline recorded in the price on yesterday's trading on the EUR/USD chart is around 140 pips!
True to the downside forecast to the support level of 1.2000, the price movement began to slow down testing the zone until trading resumed in the Asian market session this morning (Thursday).
While the Euro is expected to continue to move weakly after the previous ECB policy meeting, the US dollar is seen to continue to drive price movements on the EUR/USD chart.
The sustained strengthening of the US dollar will see the price pressed lower to head to the next support zone at 1.19000.
The price increase is likely to retest the 1.20900-1.20600 zone which forms the SBR (support become resistance) zone.
If the price fails to continue rising, the decline in the bearish trend will continue again.
On the other hand if the price manages to jump higher, the bullish target will test the higher focus zone at 1.21500-1.21800.
