EUR/USD, EUR/GBP and GBP/USD rally post US Fed 25 bps rate hike
Technical analysis on EUR/USD, EUR/GBP and GBP/USD within their fundamental context.
EUR/USD surges to ten-month high on 25 bps Fed rate hike
EUR/USD rallied to a ten-month high and broke through the psychological $1.10 barrier for the first time since April 2022 as the US Federal Reserve (Fed) raised the fed funds rate by 25 basis points (bp) to 4.50% to 4.75% and its chairman Jerome Powell mentioned the word “disinflation” several times in his comments, leading to a rebound in risk appetite and a weaker US dollar.
The cross now trades around the $1.10 mark with the November 2021 low and the March 2022 high at $1.1185 being in focus, as well as the 200-week simple moving average (SMA) at $1.1226 and perhaps even the 61.8% Fibonacci retracement of the 2021-to-2022 bear market at $1.127.
Slips should find support between the late April 2022 high and the 50% retracement of the 2021 to 2022 descent as well as last week’s high at $1.094 to $1.0929. While Tuesday’s low at $1.0802 underpins, the medium-term uptrend remains intact.
EUR/GBP is gunning for its £0.8897 mid-January high
Earlier this week EUR/GBP revisited but then rallied off its December-to-January uptrend line at £0.8763 whilst awaiting Thursday’s European Central Bank (ECB) and Bank of England (BoE) rate decisions with both central banks expected to hike rates by 50-bp later today.
The January high at £0.8897 is currently being revisited, a rise above which would lead to levels last traded in September 2022 being reached with the minor £0.90 mark being targeted.
Minor support below the £0.8877 December high is to be found around last week’s £0.8852 high. While Wednesday’s low at £0.8817 underpins, immediate upside pressure should be maintained.
GBP/USD has the $1.2446 December high in its sights
GBP/USD is once more heading up towards the December high at $1.2446 as traders await to hear by how much the BoE will raise rates today with the market anticipating a 50-bp hike to 4%.
On the way up resistance can be spotted between the December and late January highs at $1.2431 to $1.2448. If overcome, the $1.25 mark would be next in line.
Strong support remains to be seen between the late January and early February lows at $1.2272 to $1.2263 as well as along the September-to-February uptrend line at $1.2232.
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