In case you missed it, market players believe that the Fed would “skip” from raising its interest rates in June after deciding on rate hikes every decision day since March 2022.
The markets’ dovish bias was further supported by yesterday’s U.S. inflation reports, which showed headline inflation slowing down from 4.9% y/y to a cool 4.0% y/y.
Will it mean losses for USD and gains for major counterparts like EUR?
EUR/USD 1-hour Forex Chart by TV
EUR/USD just turned lower from the R1 (1.0800) of the 1-hour chart’s Standard Pivot Points, and now the pair is heading for a trend line zone that bulls and bears have been minding all month.
What’s more interesting about a move to the 1.0770 – 1.0780 area is that it means that EUR/USD has already dropped by around its 64-pip average daily volatility.
Add to that the previous resistance and the 61.6% Fib and 100 SMA support zones and I wouldn’t be surprised if at least some EUR bulls are watching.
If the Fed does pause its rate hikes, and if the ECB raises its interest rates like markets are expecting, then EUR/USD could regain its intraweek highs.
I wouldn’t discount EUR/USD extending its current downswing, however.
So, I’m looking to enter a EUR/USD long trade around the 1.0770 – 1.0780 trend line zone or the 1.0740 area closer to the 200 SMA and Pivot Point (1.0730) line.
The previous highs near 1.0830 look like legit short-term targets but I can also keep close tabs on the 1.0840 – 1.0850 zone if EUR/USD gets enough bullish momentum either from the FOMC or ECB event.
How about you? Do you think EUR/USD can extend its June uptrend?
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