EURUSD reached a new December high above 1.0900.
After registering strong gains on Wednesday. The EURUSD maintained its positive momentum and surged above 1.0900 for the first time since December 1st early Thursday. The pair has entered a consolidation phase slightly below 1.0900. As market attention focuses to the European Central Bank’s (ECB) policy announcements.
US dollar remains under pressure following the Fed’s surprise dovishness.
The US Dollar (USD) fell sharply as Federal Reserve (Fed) Chairman Jerome Powell struck a shockingly dovish tone. In the post-meeting press conference.
The Fed maintained its policy rate at 5.25%-5.5%.as projected. And the revised Summary of Projections indicated a total rate reduction of 75 basis points in 2024. Powell stated. That they were concerned with “not making the mistake of keeping rates too high for too long” and noted. That policymakers were discussing when it would be prudent to begin decreasing interest rates. In the aftermath of the Fed, the benchmark 10-year US Treasury bond yield fell below 4% for the first time in over four months, while the US Dollar Index fell about 1%.
ECB is expected to keep key interest rates unchanged.
The ECB is also expected to leave key interest rates unchanged at its final policy meeting of the year. Market investors will be paying particular attention to revised macroeconomic estimates and comments from ECB President Christine Lagarde.
In case Lagarde says it again, While it is still too early to talk about a policy reversal. And reminds us of inflation dangers. The EURUSD could prolong its gain. On the other hand, if Lagarde implies. That they will soon begin discussing the right timing of a rate decrease, the pair’s recent gains could be erased.
EURUSD Technical Analysis
The 4-hour chart’s Relative Strength Index (RSI) indicator slipped marginally lower after advancing above 70, implying that the pair may conduct a technical correction before the next leg higher. Nonetheless, when reacting to the ECB, investors are likely to disregard this technical reading.
The pivot level is 1.0900 (Fibonacci 23.6% retracement of the most recent rally). Once the EURUSD confirms that level as support, it may aim for 1.0960 (static). 1.1000 (static level, psychological level) and 1.1000 (static level, psychological level).
On the downside, the initial level of support is at 1.0860 (100-period SMA, static level), followed by 1.0830-1.0820 (200-day SMA, Fibonacci 38.2% retracement) and 1.0800 (psychological level, static level, 200-period SMA).
