The EUR/USD pair soared to a weekly high of 1.0933 on Thursday following the Federal Reserve System’s announcement of three interest rate cuts planned for 2024. These adjustments will reduce borrowing costs by 75 basis points.
The interest rate remains at 5.5% annually, its highest in 23 years, and has been unchanged for five consecutive meetings.
Federal Reserve Chair Jerome Powell noted that the regulator plans to reduce the rate this year, likely achieving a 75-basis point reduction over three stages by the end of 2024.
The Fed also continues its balance sheet contraction plan, not reinvesting proceeds from matured bonds and having no plans to sell bonds from its portfolio.
The Fed’s outlook was relatively optimistic this time, expecting the American economy to grow by 2.1% quarter-on-quarter in Q1 2024. Although the Consumer Price Index is decreasing, it is still high, and the employment market is strong due to new job creation.
The Fed’s inflation target remains at 2%, with risks to expectations seen as balanced.
EUR/USD technical analysis
Influenced by the news, the H4 EUR/USD chart found support at 1.0836, leading to a correction. Today, the price is anticipated to reach 1.0944, followed by a subsequent downward movement targeting 1.0818. The MACD indicator supports this scenario, with its signal line below zero, indicating further declines to new lows.
On the H1 EUR/USD chart, a corrective growth structure towards 1.0940 has formed. After reaching this level, a decline to 1.0888 is possible, followed by a potential rise to 1.0944. Then, a new downward wave to 1.0818, the first target, may begin. The Stochastic oscillator, with its signal line below 50, indicates a continuation of the decline towards 20.
