Euro Leaps Post Fed Hike as Chair Powell Pleases Markets. Has EUR/USD Seen the Low?

[MongiIG]

EURO, EUR/USD, US DOLLAR, GBP, BOE, CRUDE OIL, AUD, NZD, GOLD - TALKING POINTS

• The Euro has held the high ground in Asia in post Fed support and USD easing
• APAC equities followed the US lead higher while commodities were contained
• The Bank of England is set to follow the Fed, will Euro be impacted?

 

The Euro initially sold off on the FOMC rate rise as US Dollar buying emerged. The dip was quickly reversed in the post meeting press conference where Federal Reserve Chair Jerome Powell gave a rosy outlook for growth.

Most currency markets behaved in a similar fashion against the US Dollar with the British Pound posting solid gains ahead of the Bank of England rate decision today. The market has a 25 basis-point hike baked in and any deviation from that could see mayhem for Sterling.

The Australian and New Zealand Dollars continued higher through the Asian session.

The Australian Dollar was aided by a strong outcome on jobs growth data for February. 77.4k jobs were added in February to give an unemployment rate of 4.0% against expectations of 37k and 4.1% respectively. The participation rate was 66.4%, above 66.3% anticipated.

The most impressive aspect was that 127.9k full time jobs were added, while 44.5k part time jobs were lost.

The equity markets liked what they heard from Powell and Wall Street posted solid gains. The Nasdaq was the best performer, adding 3.77% in the cash session.

APAC equities followed suit and the boards are covered in green today. Hong Kong’s Hang Seng index continues to recover from savage losses and was up over 7% at one stage today.

Bond markets saw yields rise in the US session, but they have eased off through Asia today. The 2-year Treasury note is down 4 basis points from the North American close to be near 1.90%.

Commodities have generally had a positive day, with the Brent crude oil futures contract just under US$ 100 bbl at the time of going to print. Gold was a touch higher, near US$ 1,937 an ounce.

After the Bank of England rate decision and European CPI, the US will see some housing starts data.

The full economic calendar can be viewed here.

 

EUR/USD TECHNICAL ANALYSIS

After making a 2-year low at 1.08062 last week, EURUSD whipsawed back above 1.1100 before collapsing under 1.0900 And then rallying back above 1.1050.

The aggressive moves saw the price cut back above the 10-day simple moving average (SMA) but not above the 21, 55 and 100-day SMAs. This may indicate that short term choppiness and volatility was unable to overcome underlying bearish momentum.

The increase in volatility can be easily observed by the widening of the 21-day simple moving average (SMA) based Bollinger Bands.

Resistance could be at the pivot points and previous highs of 1.11065, 1.11212, 1.12743 and 1.12802.

On the downside, support might be at the recent lows of 1.08910 and 1.08062.

Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com. 17th March 2022