At yesterday’s Fed meeting, contrary to expert expectations, officials left the benchmark interest rate unchanged at 4.50%. The Fed Chair highlighted a high degree of uncertainty in the current state of the US economy due to changes in tariff policy introduced by Donald Trump’s administration. Jerome Powell also noted rising inflation and a possible economic slowdown, stating that officials need more clarity before adjusting monetary policy.
These statements from the Fed contributed to a broad decline in the US dollar.
EUR/USD
The euro weakened throughout the day yesterday, retreating from its recent highs near 1.0950. After the Fed’s decision, the pair rebounded from 1.0860 and briefly traded above 1.0900.
Technical analysis of EUR/USD suggests the possible start of a downward correction, as a “bearish engulfing” pattern has formed on the daily timeframe. If sellers manage to hold the pair below 1.0860, a retest of the key 1.0800 support level is likely. Conversely, if yesterday’s high is broken, the pair could continue its upward movement towards the psychological level of 1.1000.
Key events that may impact EUR/USD pricing in the upcoming trading sessions:
- Today at 10:00 (GMT+2): Germany Producer Price Index (PPI)
- Today at 11:00 (GMT+2): ECB President Lagarde’s speech
- Today at 12:00 (GMT+2): ECB Monthly Report
- Today at 13:00 (GMT+2): EU Leaders’ Summit
USD/JPY
The USD/JPY currency pair tested the psychological resistance level at 150.00 yesterday. However, it failed to strengthen above this level, and a sharp rejection from 150.10 allowed sellers to form a “bearish engulfing” pattern on the daily timeframe.
Technical analysis of USD/JPY indicates a potential decline towards the 148.00–147.30 range. A break above 149.30 would invalidate the bearish scenario.
Key events that may impact USD/JPY pricing in the upcoming trading sessions:
- Today at 15:30 (GMT+2): US Initial Jobless Claims
- Today at 15:30 (GMT+2): Philadelphia Fed Manufacturing Index (US)
- Today at 17:00 (GMT+2): US Existing Home Sales
- Today at 23:30 (GMT+2): US Federal Reserve Balance Sheet
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