$EURUSD Forex Signal: Waits for the ECB Interest Rate Decision
pair wavered in the overnight session after the Federal Reserve delivered its June interest rate decision. It initially jumped to a high of 1.0864 and then pulled back slightly after the Fed hinted at two more hikes later this year.The Federal Reserve voted unanimously to leave interest rates unchanged between 5.0% and 5.25%. This was the first time in ten meetings that the bank decided to leave rates intact.
Despite the pause, the accompanying dot plot showed that the Fed officials hope to deliver at least two more rate hikes this year. They expect that the terminal rate will peak at 5.6%, meaning that it will deliver two more 0.25% hikes. Some officials estimated that the Fed could hike by 0.75% by the end of the year.
While the Fed welcomed trends in headline inflation, there are concerns about core inflation, which excludes the volatile food and energy prices.Further, the Fed believes that the tightening conditions in the financial market will push unemployment up to 4.1% this year. The most recent data showed that the jobless rate stands at 3.7%. The Fed expects that the economy will expand by 1% this year.
The next important catalyst for the EUR/USD pair will be the upcoming interest rate decision by the European Central Bank scheduled for later today. Unlike the Federal Reserve, analysts expect that the ECB will decide to hike rates by another 0.25%. While European inflation has dropped, it is still much higher than the ECB target of 2.0%.It rose to a high of 1.0860, the highest point since May 17. On the 4H chart, the pair managed to cross the important resistance at 1.0828.
It is above the 50-day moving average while the Relative Strength Index has moved to the overbought level. It has been rising since mid-last month. Therefore, the pair will likely continue rising as buyers target the next resistance point at 1.0910.
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