By RoboForex Analytical Department
The EUR/USD pair is holding steady around 1.0805 on Thursday, following a surge in volatility the previous evening. The Federal Reserve concluded its meeting with a neutral stance, maintaining the interest rate at 5.25% per annum as anticipated. The Fed’s comments hinted at a possible interest rate cut by December while projecting more aggressive rate reductions for 2025, which the market viewed positively.
However, it was the US inflation data that significantly impacted the EUR/USD pair, more so than the Fed’s announcement. The Consumer Price Index (CPI) for May showed a year-on-year increase of 3.3%, down from 3.4% in the previous month. On a month-on-month basis, the CPI was flat, compared to a 0.3% increase in April. Core inflation, which excludes volatile food and energy prices, also decreased to 3.4% year-on-year, surpassing expectations. This decline in price pressures followed unexpectedly robust employment market reports.
Investors have been highly reactive to each successive set of statistics, partly because the Fed has emphasised the significance of these data releases in shaping its monetary policy decisions. Following the inflation report, the EUR/USD briefly spiked to 1.0852 before retreating slightly.
EUR/USD technical analysis
Free Reports:
Download Our Metatrader 4 Indicators – Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
On the H4 chart, EUR/USD surged past the consolidation range on the news, executing a correction wave to 1.0851. Currently, a downward impulse has brought it to 1.0800. We anticipate the formation of a consolidation range around this level. A downward breakout could lead to a further decline to 1.0776, potentially extending to 1.0701. The MACD indicator supports this bearish outlook, with its signal line positioned below zero and pointing downward.
On the H1 chart, EUR/USD has completed a decline to 1.0800. A corrective movement to 1.0826 may occur, testing from below. Following this correction, a new downward wave is expected to target 1.0766, with a continuation towards 1.0706 likely. The Stochastic oscillator, with its signal line currently above 20, suggests an upward move to 80, confirming the potential for this bearish trajectory.
Market outlook
As the market digests the implications of the latest US economic data and the Federal Reserve’s statements, fluctuations in the EUR/USD pair will likely continue. Investors should remain vigilant and prepared for further volatility as more economic indicators are released and the Fed’s monetary policy evolves.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
- The Japanese yen fell to a six-week low after the Bank of Japan ended its meeting Jun 14, 2024
- Target Thursday: 3 cryptos met expectations, with one surprise winner Jun 13, 2024
- US Dollar declines as Fed signals potential rate cut and inflation eases Jun 13, 2024
- The US Fed has planned only one rate cut this year and four cuts in 2025 Jun 13, 2024
- Euro hits monthly low amid political instability in France Jun 12, 2024
- China’s consumer inflation is on the rise. Today, the focus is on the FOMC meeting Jun 12, 2024
- US500: Braces for mid-week double whammy Jun 12, 2024
- Which cryptos could see biggest moves after US CPI/Fed meeting? Jun 11, 2024
- Brent Crude Oil stabilises around 81.50 USD amid demand optimism Jun 11, 2024
- Euro falls to four-week low: politicians to blame Jun 10, 2024
