Euro Faces Pressure Amid Anticipated Rate Hikes by Fed and ECB
Andrey Goilov | Jul 24, 2023 11:04
The major currency pair remains under pressure around 1.1120 on Monday.
Investors are feeling the tension, as the most eventful week of this month has begun. Both the US Federal Reserve and the European Central Bank will hold meetings, and decisions on interest rates are expected on Wednesday and Thursday, respectively.
The Fed is anticipated to raise rates by 25 basis points (to 5.5% per annum) and signal the end of the "tight" phase in monetary policy. Investors also expect the ECB to signal a rate hike. The European regulator’s stance is more hawkish, which may create the basis for further growth of the credit cost.
In any case, all market reactions will be closely linked to the decisions of the Fed and ECB. So far, market sentiment is favouring the US currency.
Technical analysis of the EUR/USD price chart
On the H4 chart, EUR/USD has performed the second upward impulse, completing the first half of the third declining wave. At the moment, the market is forming a consolidation range around 1.1125. The price is expected to break the range downwards and continue the wave to 1.1033 by the trend. This is a local target. After the price reaches this level, a correction to 1.1122 could form (with a test from below), followed by a decline to 1.0990. This is the first target. Technically, the MACD indicator confirms this scenario; its signal line is aimed strictly downwards to the zero mark.
On the H1 chart, EUR/USD is forming a consolidation range around 1.1128. It is interpreted as a trend continuation pattern. Breaking the range downwards might open the potential for the second half of this wave. The target of the wave could be 1.1030. Technically, the Stochastic oscillator also supports this outlook, with its signal line having broken the 50 mark downwards and going down to 20.
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.
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