EUR/USD: Pressures continued on the euro in the wake of the Fed

The single European currency continues to receive pressures which gained a strong pace after yesterday’s announcement by the Fed to increase interest rates by 75 basis points and the maintenance of the hawkish retoric by President Jerome Powell.

Yesterday had intense emotions as the trading on of the exchange rate moved at a very intense pace during the announcement and also afterwards with the Fed’s president comments.

The initial reaction of the euro was quite expected as the decision for 75 basis points was fully discounted did not surprise the markets with the consequence that the reversal of the trend came shortly after , as the aggressive rhetoric of Fed came back to the fore which seems it willing to keep the gap that has been created at the level of interest rates in relation to the European Central Bank.

Market behavior has confirmed our last assessment that it would be very difficult for the single European currency to return to any strong upward momentum at this time.

The market is  expected to offer intense emotions  and today as we await the speech of the President of the European Central Bank, Christine Lagarde, which the buyers hope that will  give some support to the single currency, while then we also have the important announcement on the course of the service sector in the US.

In general the mixed picture of the market remains with the exchange rate moving in both directions of late , but remaining within the broader context of the downward channel which has started since May 2021 as we have repeatedly notice.

Confirmation of Fed’s  hawkish rhetoric was simply the trigger for the pair to move away from the upper range of the downtrend channel and return to lower  levels With the prospect that these pressures to have further continuation is quite likely.

In any case, i we will not differentiate my basic strategy to buy on dips  the European currency  as the reaction of the exchange rate has excelent behavior  and i believe even if the dips are more intense and in more  lower levels we will see the reactions again.