Daily Market Recap – EURUSD Rising again after Fed Meeting

The dollar fell back this week, a victim of Jerome Powell's damning announcements that put off the prospect of an interest rate hike and weaker-than-expected growth in U.S. quarterly GDP.

Since the end of the Fed meeting on Wednesday, the dollar has been falling against the other major currencies as the Federal Reserve favors supporting the U.S. economy with low rates and a massive asset purchase plan. It still believes that inflation should not remain above its 2% target for long.

In terms of economic indicators on Friday, consumer price inflation accelerated in June in the United States, with core inflation moving even further away from the Federal Reserve's 2% target. The core PCE price index, the U.S. central bank's preferred measure of inflation, is up 0.4% month-over-month and 3.5% year-over-year.

The inflation theme thus remains very important despite the Fed's reassuring message about it, as the market seeks to determine the timing of a possible tightening of the central bank's monetary policy.

From a technical perspective, the euro could begin a bullish recovery in the coming weeks. It is clear that the pair is trading in a range between $1.2260 and $1.1750. Thus, the market has come to rebound from the bottom of the range by forming a reversal pattern.

Should the market enter a consolidation phase, then a new price rotation on the upper bound located around $1.2260 should not be excluded. On the other hand, A breach of $1.1875 would pave the way for an acceleration towards the 50-period moving average at $1.1955. Overall the technicals hint at a bullish restart and as long as prices do not break through $1.1750, the bullish scenario is to be preferred.

(Chart Source: Tradingview 01.08.2021)

Buyers may look towards this level as a target this week. Assuming the bullish flow does not run out of fuel, the EURUSD could continue its run and come to work on the lower bound of its long-term uptrend channel.

Support & Resistance Levels:

R3 1.22600

R2 1.20000

R1 1.19900

S1 1.18452

S2 1.17500

S3 1.16380

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.