In this EURUSD analysis, the euro has soared higher against the US dollar after the US FOMC Dot Plot showed that the central bank does not expect to hike US interest rates again this year.
March 21, OctaFX – The US dollar declined sharply against its peers after the Federal Reserve delivered its interest rates decision. As expected, the bank left rates unchanged at the range of 2.25% and 2.5%. The bank also issued a somewhat dovish statement, reiterating that the unlikelihood of interest rates this year.
The bank also said that it will end the reduction of its balance sheet in September. This led to a rise in US yields and for US stocks to pare previous losses. In the current program, the Fed is allowing $30 billion in its treasuries and $20 billion from its mortgage-backed securities (MBS) to roll-off and investing the rest. In May, it will drop the treasuries but continue to roll off the MBS.
EURUSD technical analysis
After consolidating for the entire week, the price of EURUSD broke out in an upward direction after the Fed sounded more dovish than expected. The pair rose to a high of 1.1445, which was the highest level since February this year.
The pair has been on a sustained upward trend since March 8. On the hourly chart, this price is slightly below the lower line of the Bollinger Bands while the RSI is above the overbought level of 70. The standard deviation too is moving upwards. In the near-term, the pair could pare these gains and retest the previous support of 1.1350.
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