Although the expected outcome of the FOMC meeting is in line with market forecasts, the expected price movement on the chart of the EUR/USD currency pair is the opposite.
This was due to the depreciation of the US dollar after investors' reaction to a dovish statement by Federal Reserve (Fed) Chairman Jerome Powell following the decision to raise the interest rate by 50 basis points.
Powell signaled a 75 basis point interest rate hike was difficult for the central bank to implement and this slightly dampened expectations of plans for a continued rate hike by the Fed.
However, market analysts see this situation as merely an initial reaction of investors to take advantage of previous positions and remain expecting the strengthening of the US dollar for a longer period of time.
On the EUR/USD chart, the price since last week is seen moving above the support level of 1.0500 to resume trading earlier this week.
But prices have begun to show an increase from the support following the reaction to the results of the FOMC meeting earlier this morning.
Investors saw early signals for a bullish trend change after the price movement which was also supported by the Moving Average 50 (MA50) support level on the 1 -hour time frame on the EUR/USD chart.
The rally has also passed the resistance at 1.0600 and can be expected to continue higher towards the level around 1.0800.
A continued higher rise is seen to test the previous resistance zone at around 1.09300.
But if the US dollar re -shows its strength, a decline will ensue and the price will retest the support level at 1.0500.
If the decline passes the support, the price will record a decline to the latest 6 -year low with the expectation to test the support zone in December 2016 trading around 1.0400.
Investors will next focus on the United States (US) NFP employment data report on
this weekend which will also affect the US dollar.
