The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains in its last sessions by 1.29%. It added about 416.33 points and to settle at the end of trading at the level of 32,812.501, after it declined during Tuesday’s trading by -0.23%.

After falling on Tuesday, stocks rose back into trading on Wednesday as House Speaker Nancy Pelosi left Taiwan and China did not take any immediate military action.

Better-than-expected economic data released on Wednesday also helped stocks rally. The ISM Non-Manufacturing PMI rose to 56.7 in July from 55.3 in June. Analysts polled on FactSet had expected a reading of around 53.5.

Meanwhile, St. Louis Fed President James Bullard told CNBC on Wednesday that he does not believe the US has entered a recession, and Richmond Fed President Thomas Barkin on Wednesday joined policymakers saying the US central bank is committed to setting inflation. under control and brought him back to his 2% target.

Investors are now looking to Friday’s jobs data from the Bureau of Labor Statistics to see if the labor market slumped in July. After the summary of job creation and labor turnover released on Tuesday by the BLS showed that 10.7 million jobs were added in June, the lowest level since September of 2021. This may be a sign that the hot labor market is declining.

Dow Jones Index Outlook

Technically, the index rose in its last sessions, supported by the continuation of its trading above its simple moving average for the previous 50 days. The dominant trend remains the corrective bearish trend in the short term along a slope line, as shown in the attached chart for a (daily) period. The start of the influx of negative signals Relative strength indicators, after reaching overbought areas.

Therefore, we still expect the index to return to decline during its upcoming trading, as long as the pivotal resistance level 33,240 remains intact, to target the first support levels at 31,885.

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The exchange rate of the euro against the dollar achieved only partial gains compared to the decline of the US dollar in recent days. EUR/USD enters the new week’s trading on a more stable basis and could perform better in the coming period if the single European currency succeeds in overcoming the risks of the looming US economic data. The EUR/USD pair recorded gains towards the 1.0275 resistance level, which is stable around it at the time of writing its highest analysis in a month.

In general, the single European currency EUR came under pressure against the rest of the currencies last week amid intense market focus on reduced European gas supplies. It pushed prices higher for a brief period and led the European Union to agree to a rationing plan that would further impede continental economies during the winter.

This Russian protest against sanctions related to the invasion of Ukraine hampered the EUR/USD rate last week but was not enough to push it below the emerging technical support level around 1.0116, which the single European currency tested but persisted on several occasions. The Euro’s losses were limited by the dollar’s selling in the wake of the Fed’s decision last Wednesday, and it is now entering the new week on a stronger basis with technical resistances around 1.0246 and 1.0272 in crosshairs.

Commenting on the performance, Lee Hardman, a currency analyst at MUFG, said, “After the Fed indicated that the pace of US interest rate hikes is likely to slow in the future and make future policy decisions more data-intensive, we decided that the remaining risk balance for the US dollar was in the longer term. The relative was not favorable.”

USD Reacts to Fed Decision

The dollar’s reaction to the Federal Reserve’s decision last week has led the analyst and his colleagues to suggest that institutional clients of the bank’s earnings are walking away from a previous bet against the single currency, which briefly fell below par with the dollar during mid-July. The analyst added, “Although we do not expect the massive sell-off in the US dollar to prove sustainable, we would prefer to reduce the long exposure to the US dollar until the dust settles. Economic data from the Eurozone has also been more supportive of the Euro than expected over the past week.”

The Euro also received more steady support with the release of Q2 GDP and inflation data for July released on Friday, indicating that Eurozone economies are holding up better than many feared during the first half of the year. According to official figures, the European economy grew 0.6% in the three months to the end of June after an upwardly revised 0.6% growth to open the year, while overall and core inflation measures rose more than expected for July, with potential implications for European Central Bank policies.

Analysts now expect the eurozone to be in recession in the second half of this year; Spot data is already slowing materially, and more production disruptions are likely,” warns Michael Cahill, Goldman Sachs forex analyst, noting the ongoing risks to gas supplies in Europe. Many analysts and economists are still bearish in their forecasts for the single European currency and European economies, although not everyone belongs to this school of thought, and the Euro is entering the new week’s trading on firmer grounds than it was at any time in July.

Whats coming this week?

This week will be a busy period for the US economic data that will bring with it risks and opportunities for the single European currency. The Institute of Supply Management’s (ISM) Purchasing Managers’ Index (PMI) surveys on Monday and Wednesday are major highlights of the US calendar and markets are likely to look to see if they confirm the bleak message of the S&P Global surveys, although the US jobs report is not. July agricultural will be very important.

The FOMC continued to play down signs of deteriorating demand as it raised the funds rate by another 75 basis points. For many currencies, there is a risk that this week’s numbers and upcoming speeches from Fed rate-setting committee members have positive effects on the dollar relative to markets’ assumptions about interest rates from September onwards, which were revised downward after last week’s policy decision.

This could potentially involve downside risks for the EUR and a possible retest of the emerging level of technical support around 1.0116

Technical Forecast for EUR/USD:

EUR/USD is moving within a narrow range visible on its short-term time frames, and it appears that another test of resistance is expected. Price could bounce back off 1.0250 minor psychological mark. If so, EUR/USD could find its way back to range support around 1.0115. Technical indicators are indicating that the general trend remains bearish, and the top of the range is likely to keep gains in check.

So far, despite the recent performance, the 100 SMA is still below the 200 SMA to indicate that downward pressure is in place, but the pair has already climbed above both indicators as an early bullish sign. In addition, both moving averages can hold as dynamic support on dips to 1.0200. Stochastic is turning bearish after briefly staying in an overbought area, which indicates that downward pressure is increasing. On the other hand, it is possible to leave the RSI neutral, to reflect the conditions of the limited range.

As mentioned before, EUR/USD may take its cues from high-level US data this week, including the release of NFP numbers on Friday. There is another pace of slowdown in hiring, which could lead investors to suspect that the Fed can continue its violent tightening cycle.

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Amid bearish momentum, and for three trading sessions in a row, the USD/JPY currency pair is settling in narrow ranges between the support level of 135.56 and the level of 136.90, which is stable around it at the time of writing the analysis. As I mentioned at the beginning of this week’s trading, the dollar-yen pair will continue to move in a narrow range until the US Federal Reserve announces the decision to raise US interest rates today. It will also announce the US economic growth rate and the Fed’s preferred inflation reading, and the personal consumption expenditures price index. These data and events are important to predict the path of the US dollar against the rest of the major currencies in the coming days.

The US Federal Reserve has raised its benchmark short-term interest rate three times since March. Last month, the Federal Reserve raised the interest rate by three-quarters of a percentage point, its largest rise since 1994. The Fed’s policy-making committee is expected to announce another three-quarter point increase on Wednesday.

Important Events to Affect US Economy

Economists are now concerned that the Fed, having played down inflation, will overreact and raise rates ever higher, putting the US economy at risk. They are warning the Fed against tightening credit too hard.

Prices in Japan are showing more signs of a rally on a larger scale as higher commodity prices and a weaker yen force companies to charge consumers higher costs not seen in decades. Multiple measures of deeper inflation trend reached record levels in June, according to data from the Bank of Japan. The contracting average, a measure of price growth based on the largest gains and declines, was up 1.6% from the previous year. This was the fastest rate of increase in data since 2001, according to the bank.

The weighted average, a price measure that gives more importance to key items, also hit a new record high. Meanwhile, the share of increasing items in the consumer price basket rose to 71.3%, the highest on record. While the indicators show that price dynamics in Japan are cooler than the sharp growth in the United States and Europe, they indicate a widening trend of inflation within the economy. This would make the rally in prices more likely to continue and influence policy.

BoJ Governor Haruhiko Kuroda has repeatedly stressed the need for sustainable inflation before he considers adjusting the easing stance. The Bank of Japan has become the leading party among the major central banks as they rush to raise interest rates. Kuroda insisted that higher wages was needed to turn cost-push inflation into permanent price growth.

Another report from the Bank of Japan earlier showed that rates for services among businesses rose 2% from a year earlier in June. Excluding the impact of the sales tax increase, this is the largest gain since May 1992, although the gains were driven by transportation and postal services, a segment directly affected by higher fuel prices. Other changes in price trends were also monitored. Some BOJ board members reported signs of a shift in Japanese consumers’ mindset about prices, according to the minutes of the June policy meeting, also released earlier on Tuesday.

USD/JPY Forecast:

There is no change in my technical view of the performance of the USD/JPY currency pair. Despite the recent performance, the currency pair still has an opportunity in the upward direction, especially if it returns to the top of the resistance 138.20, which in turn supports the move towards the historical psychological resistance level of 140.00, respectively. On the other hand, according to the performance on the daily chart, moving towards the support level 134.40 will be important for the bears to have a stronger control over the trend.

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During last week’s trading, the EUR/USD exchange rate rose again from the edge of a five-year low last week. With escalating local headwinds and technical resistance looming almost just above the market, the euro could struggle at any time. At the beginning of this week’s trading, the euro-dollar moved in narrow ranges amid an American holiday, between the support level of 1.0473 and the level of 1.0545. It settled around the level of 1.0507 in the beginning of Tuesday’s trading. The European single currency, the euro, could benefit early in the week’s trading from Monday’s rally by the closely-linked renminbi, which followed the already expected decision of the People’s Bank of China (PBoC) to leave some various interest rates unchanged.

The Chinese yuan was the top performing major on Monday in what was a favorable start for the euro against the dollar, although the European currency will also have to weather a number of headwinds that may limit its ability to recover further this week. These include market concerns for the global economy and risks arising from last week’s cut in Russian gas flows to Germany and Italy, which led to a sharp increase in gas prices on international markets. Commenting on this, Ludovico, an economist at Barclays, says, “The abundance of headwinds facing the eurozone economy has convinced us that a technical recession early in the year is highly likely, in the absence of a respite in geopolitical tensions and/or significant financial interventions, both of which we consider unlikely.”

Russia’s decision this week to cut off some of its gas exports to Germany, Italy and France may herald a complete halt to gas flows. Accordingly, the analyst added, “In this case, we expect the euro area to witness an earlier and deeper recession.” Higher gas prices will increase inflation in Europe and beyond, but it comes at a point when financial markets have already been bullish on the outlook for the global economy in part due to expected interest rate responses from central banks.

According to experts, it is time to take the risks of a recession more seriously. Global asset markets are in turmoil. The combined withdrawal of stock and bond markets now exceeds the nominal decline during the financial crisis. The biggest risk to the outlook and the current economic cycle is that central banks will continue to rise too high for too long, and a recession is inevitable.

This is partly why European Central Bank President Christine Lagarde’s appearance in the European Parliament will be closely watched and will be a highlight of the European calendar ahead of Thursday’s S&P Global PMI surveys for Europe’s services and manufacturing sectors. These appearances come after the European Central Bank called an unscheduled meeting last week and asked bank staff to “accelerate the completion of the design of a new anti-fragmentation instrument for Governing Council consideration” due to the collapse in some bond markets in southern Europe. The bond sale in Europe came on the heels of the European Central Bank’s announcement earlier this month that it expected to start a rate hike in July, which would mark a serious start to a broader process of withdrawing the extraordinary monetary stimulus provided to the eurozone through sub-zero interest. rates and quantitative easing over a number of years.

Financial markets will be particularly interested in President Lagarde’s testimony after the European Central Bank asked bank staff last week to “accelerate the completion of the design of a new anti-fragmentation instrument for Governing Council consideration”. This week will be devoid of major economic data for the Euro and the market focus is likely to see the emergence of Federal Reserve Chairman Jerome Powell who will present his semi-annual monetary policy report to the US Congress on Wednesday and Thursday.

According to the technical analysis of the pair: There is no change in my technical view of the price performance of the euro against the dollar EUR/USD, as the general trend is still bearish. Stability below the support 1.0500 supports the bears’ control of the trend and warns of a stronger bearish move and the closest to the trend is currently the support levels 1.0475 and 1.0380, respectively.  On the upside, the bulls will move towards the resistance levels 1.0775 and 1.0835 to make a first breach of the trend. Otherwise, the trend will remain bearish, and I expect relatively calm movements today as well, in the absence of catalysts for a strong move.

The British pound may be on the way to recover against the US dollar if the Federal Reserve eases market expectations. Indeed, after the announcement, the price of the GBP/USD currency pair recovered to the level of 1.2204, a rebound from the recent collapse, which moved on its impact towards the 1.1933 support level, its lowest for a few years and settles around the 1.2170 level at the time of writing the analysis. Investors are counting on the Bank of England’s announcement today to look for catalysts for the pound in the forex market.

The Fed raised interest rates by 75 basis points, but according to analysts at Western Union Business Solutions, expectations about the scale of the Fed’s post-June hikes are starting to look excessive. As money markets show almost certainty that 75 points of gains will be delivered, “it should be noted that given the current aggressive market pricing, there is a risk that the Fed will fail to deliver on its expected hawkishness.”

If the market revises expectations of how much further interest rates will rise, by lowering the expected final interest rate (essentially the peak rate expected in 2023), the dollar could give up some of its recent gains. Some analysts say this could allow GBP/USD to extend its so far tepid recovery from 28-month lows.

The call comes on the heels of the pound to the dollar dropping below 1.20 to test a low of 1.1934 on Tuesday.

Overall, the GBP/USD exchange rate is still stuck in a specific downtrend and any strong bounces may be short as the trend extends. According to some experts, “the pound sterling is licking its wounds after falling to its lowest level in 13 months against the euro and its lowest level in 28 months against the US dollar. There are still many headwinds, such as higher UK inflation, lower economic growth expectations compared to its major counterparts, slowing price expectations, and also a harsh injection of more political anxiety.”

FX analysts point to a number of headwinds facing sterling, including ongoing tensions between the European Union and the United Kingdom over the Northern Ireland protocol and the unveiling of a new Scottish independence scheme by Nicola Sturgeon.

The biggest risk event for the British currency in the near term comes in the form of the Bank of England’s meeting on Thursday as it considers the next move on interest rates. Markets are currently expecting a 25bp hike but see a high potential for a material 50bp increase in light of the aggressive stance of the Fed and the UK’s ongoing battle against 9.0% inflation in April.

While a more decisive 50 basis point rally could help investor sentiment toward the British pound, it is likely to remain disappointing. According to some currency analysts, “The last time the GBP/USD fell below $1.20, the currency pair slipped all the way to $1.14 (albeit for a short time). All eyes are on the weekly close to provide the next trend signal, but given how much the GBP has fallen recently, selling cannot rule out a term recovery. The Fed and Bank of England meetings will play a critical role in determining the course of the sterling-dollar.”

According to the technical analysis of the pair: The reaction from the Bank of England’s announcement today, along with the results of the US economic data and the path of global stock markets, will have a strong and direct reaction to the performance of the GBP/USD pair. The strongest bears’ control, and according to the performance on the daily chart below, stability below the support 1.2155 will support the stronger bearish move below the psychological support 1.2000, and have completed the path of the collapse.

On the upside, it will be important to break the 1.2330 and 1.2500 resistance levels for the first exit from the current downtrend.

In the middle of this week’s trading, gold tried to rebound higher, but its gains did not exceed the level of $1836. It returned to stability around $1812 at the time of writing the analysis. The bulls are looking for strong catalysts to avoid a collapse below the psychological support level of $1800, which may increase the movement of the bears strongly towards lower levels. The return of the strength of the US dollar was a strong catalyst to prevent the gold price from moving further.

The US Federal Reserve has re-emphasized strongly to the financial markets that it is ready for the pace of raising US interest rates, which is losing investors’ appetite for buying gold a little.

On the other hand, the gold market finds momentum from the continuation of the Russian-Ukrainian war and negative expectations for the future growth of the Chinese economy in light of a new outbreak and restrictions imposed to contain Covid-19. Its forecast for China’s GDP growth this year to 4% from 4.5%, citing worse-than-expected economic data in April.

Economists also lowered their second-quarter growth forecast to 1.5% year-on-year from 4% previously, according to a report on Wednesday. Goldman said the full-year growth estimates are based on the assumption that Covid will remain mostly under control, that the property market is improving and the government is boosting infrastructure spending. “Despite the significant economic costs incurred in controlling the omicron variable in March and April, the leadership has not faltered from the GDP growth target of ‘about 5.5%’ thus far and doubled down on its ‘dynamic zero-covid’ policy in early March,” the economists wrote in the special note. mayo “.

On the daily chart, the price of gold is still around the $1800 level, a separating line between the two directions, and the stability above gives the bulls some hope to launch higher again, as it supports a move towards the resistance levels $1825 and $1855, which supports the upward trend. Then it can move back to the psychological top of $1900 again.

On the other hand, breaking the support level of $1785 supports the bears to launch in the same last performance, but I still prefer buying gold from every descending level, despite the desire of global central banks to raise interest rates, which will be negative for gold. Other factors include geopolitical tensions due to the Russian-Ukrainian war and skirmishes from both sides of the Brexit, along with a new outbreak of the epidemic that threatens the second largest economy in the world.

All global financial markets, without exception, are awaiting the most important event of this week, which is the announcement of the US Federal Reserve.

The announcement is to raise US interest rates by half a point at once to confront the fiercest global inflation wave caused by the factors of the Corona pandemic and recently the Russian-Ukrainian war. Prior to this event, the price of gold settles down around the support level of $1869 an ounce, after losses to the support level of $1850 an ounce. Since last week’s trading, the gold price has been below the psychological resistance of $1900 an ounce until the important day happened.

In general, the gold market is affected by the tightening path of global central banks, especially the US Federal Reserve.

On the other hand, the gold market may take some momentum from another source, as the outbreak of the pandemic renewed in controlling investor sentiment, which paves the way for buying gold as a safe haven. On Wednesday, Beijing closed about 10% of stations in its extensive subway system as an additional measure against the spread of the Corona virus. Beijing has been on high alert for the spread of COVID-19, with restaurants and bars restricted to takeout only, gyms closed, and classes suspended indefinitely. The city’s major tourist sites, including the Forbidden City and the Beijing Zoo, have closed indoor exhibition halls, and are operating at only partial capacity.

A small number of communities where cases have been detected have been isolated. People living in “controlled” areas have been told to stay within city limits, including 12 areas considered high risk and another 35 considered medium risk. Taking a lighter touch in Beijing, China has generally adhered to its strict “zero COVID” approach restricting travel, testing entire cities, and setting up sprawling facilities to try to isolate every infected person. Lockdowns start with buildings and neighborhoods but spread citywide if the virus spreads widely.

That has caused the most disruption in Shanghai, as authorities slowly work to ease restrictions that have forced most of the city’s 26 million residents to stay in their apartments, apartment complexes or immediate neighborhoods for nearly a month, and in some cases longer.

According to the technical analysis of gold: The luster and luster of the bullish gold price will not return without the return of penetrating the psychological resistance of 1900 dollars an ounce, which stimulates the bulls to launch further higher. So far, there is a downward shift in the trend that may be supported by a move towards the support levels of 1848 and 1830 dollars, respectively. As I mentioned before, I still prefer buying gold from every descending level. Global geopolitical tensions and the pandemic’s survival in controlling sentiment, especially as it threatens the second largest economy in the world. These are enough factors to think about buying gold in the end.

During recent trading sessions, the price of the GBP/USD currency pair is moving in narrow ranges, amid bearish momentum, between the support level of 1.3082 and the resistance level of 1.3180. It settled around the level of 1.3115 at the time of writing the analysis. In general, the GBP/USD exchange rate fell to its lowest level in 18 months due to the strength of the dollar and increasing uncertainty about the Bank of England (BoE) interest rate outlook, which may continue to limit the scope of the sterling recovery over the coming days.

The British pound took a strong loss against the rest of the currencies in the forex market after Bank of England Governor Andrew Bailey suggested that financial markets may be overambitious in their assumptions about interest rate expectations later this year, which explains the cautious bearish performance of the pound.

Overall, recent comments and guidance from the Bank of England have put a growing question mark over expectations that the bank rate will reach 2% by the end of the year, and just as Federal policy makers (Fed) have encouraged financial markets to expect a sharp rise in the Fed funds rate this year and next.

Stubborn increases in US inflation have led the Federal Reserve to increasingly direct investors to expect a full withdrawal of the rate cut from the 1.75% announced in March 2020 and then some on top over the coming quarters. This has seen a shift in financial market pricing to mean a high probability that the Fed will raise the US federal funds rate to 3% by late 2023. This would raise the index to its highest level since before the 2008 financial crisis and would be in addition to the effort the Fed expected to shrink its balance sheet.

For his part, Federal Reserve Chairman Jerome Powell said at the press conference last month, “It will be faster than last time and of course it will be much faster in the cycle than last time.” But it will look familiar. I just want to say that I’m sure there will be a more detailed discussion in the minutes of our meeting which will come out in three weeks, and I expect we’ll pretty much set the standard for what we’re looking at.”

The Fed’s balance sheet plans are likely to be the highlight of this week for the GBP/USD rate and are expected to be announced during Wednesday’s meeting minutes of the March Fed policy meeting.

According to the technical analysis of the pair: Within he bears’ control, the price of the GBP/USD currency pair may head towards the 1.3000 psychological support again if the currency pair settles around the 1.3080 support. Investors are balancing the future of monetary policy tightening by the Bank of England and the US Federal Reserve, which will favor the downside. On the other hand, there will be no strong and sharp bullish trend without moving towards the 1.3335 resistance, according to the performance on the daily chart.

The sterling dollar currency pair will be affected today by the reading of services purchasing managers from both Britain and the United States of America.

The EUR/USD exchange rate’s recovery from early March lows stalled last week, causing the single European currency to partially reverse some of its gains ahead of the weekend and leave it at risk of a deeper setback over the coming days. The EUR/USD currency pair fell to the support level of 1.0944 at the beginning of this week’s trading, and settled around the level of 1.0985 at the time of writing the analysis, amid strong and continuous control of the bears on the trend. The Euro fell after a slight last minute rise in crude oil and gas prices seemed to weigh on the Euro just as the US Dollar gained momentum on a firmer basis against many of the major currencies.

The EUR/USD has proven vulnerable to sharp hikes in energy prices, which could be seen again this week if the Kremlin pushes ahead in an effort to force “unfriendly countries” to pay for Russian gas in rubles rather than in euros and dollars. “This sent gas prices up sharply after an extended downtrend and weighed on the global risk sentiment,” says Chris Turner, market analyst at ING Bank. The analyst added by saying that the euro-dollar tends to 1.0800-1.0900 in the coming weeks.

The Kremlin’s plan puts European countries between a rock and a hard place because, if implemented, it would undermine the impact of international sanctions imposed on Moscow over its war in Ukraine, while refusing to pay in rubles could harm European gas supplies. The latter could represent an upward risk to energy prices and an almost certain weight around the ankles of the euro-dollar rate, although both will also be sensitive to the outcome of this week’s negotiations between Russia and Ukraine, which are likely to be an upward risk for the euro.

Talks resume in Turkey and run through Wednesday and any further suggestions on making progress toward a ceasefire or conflict resolution are likely to be supportive of euro exchange rates in almost all areas, and vice versa. Commenting on this, Derek Halpini, Global Markets Analyst at MUFG warns, “Despite the continued talk of progress in the peace talks between Russia and Ukraine, there was no clear breakout.” Therefore, the EUR/USD pair may head lower towards 1.07 in the coming weeks. .

While the positive noise from negotiations between Russia and Ukraine is likely to be positive for the euro, the euro and dollar rate will also have to contend with US interest rate expectations, which still pose upside risks to the dollar. This comes after Chairman Jerome Powell told the National Association of Business Economics conference last Tuesday that US interest rates could be raised in 0.50% increments on more than one occasion, and at a faster pace than financial markets have been expecting so far for the coming months.

Overall, the risk of the Fed moving faster as a burden on the euro could grow this week if Thursday’s reading of the core February PCE price index, the Fed’s preferred measure of inflation, shows domestic inflation gaining momentum again last month. .

According to the technical analysis of the pair: There is no change in my technical view of the performance of the EUR/USD currency pair. The general trend is still bearish and stability below the 1.1000 level motivates the bears to move further down. The next most important support levels may be 1.0925 and the psychological support 1.0800 is still in the bears’ range As long as the Russian war exists and its negative consequences. On the upside, the most important resistance levels for the pair may now be 1.1130 and 1.1220, respectively. I still prefer to sell EURUSD from every bullish level.

The pair will interact today with the announcement of the German GFK consumer climate index, and from the United States, the number of job opportunities and the US consumer confidence reading.

Before the end of last week’s trading, the price of EUR/USD succeeded in achieving cautious gains that brought it to the resistance level of 1.1137. With the continued concern about the Russian war, and the euro’s gains, it will remain an opportunity to sell. During the Friday session it fell back to the 1.1003 support level and closed trading stable around the 1.1050 level. The EUR/USD pair’s gains came after the Federal Reserve took the first step towards a tight monetary policy, which appears to lead to more profit-taking in many US exchange rates.

In general, the dollar’s exchange rates fell almost against the rest of the other major currencies following the widely expected Federal Reserve’s decision to start raising interest rates. For his part, US Federal Reserve Chairman Jerome Powell said about the latest report of the Federal Open Market Committee (FOMC): The expectations of policy makers for interest rates. “The way we think about this is that every meeting is a face-to-face meeting, and we will look at the evolving circumstances and if we conclude that it would be appropriate to move more quickly, we will do it,”.

The US interest rate was raised to between 0.25% and 0.5% while the US Federal Reserve indicated that it is likely to match the market expectations for the benchmark index to rise by 2% this year. It also indicated that it is likely to exceed expectations for 2023. Analysts and financial markets are already widely like this result of the bank’s latest decision.

Policymakers’ forecast group for March suggested US interest rates could rise to between 2.5% and 3.25% in 2023, although Chairman Jerome Powell said the FOMC would be willing to move faster this year. year and the following if inflation does not follow the expected path. “Nevertheless, we expect, especially with the effects of the war but also with the data we’ve seen so far this year, that we expect inflation to remain high through the middle of the year, start to decline and then decline more sharply next year,” Powell added.

Previously, the Fed had expected US inflation to peak sometime in the first quarter of 2022 before starting to decline gradually later in the year. If US inflation eventually prompts a decision to speed up interest rate hikes, the financial market rate will likely flip in favor of a stronger US dollar, which could inevitably be a headwind to the euro-dollar exchange rate.

Meanwhile, there are also potential upside risks for the dollar and eventual downside risks for the EUR/USD resulting from the Fed’s plan to initiate the process known as quantitative tightening. Ultimately, quantitative tightening will see the bank start shrinking its $8.9 trillion balance sheet by stopping to reinvest predetermined amounts of government bonds and other assets when they reach their maturity dates.

The process is something that will draw “liquidity” out of the financial system as the Fed shrinks its balance sheet, resulting in a “financial tightening” that is controlled by using pre-set “caps” on the value of balance sheet assets that are excluded each one month of it.

According to the technical analysis of the pair: There is no change in my technical view towards the price of the euro against the dollar EUR/USD. The general trend is still bearish, and the return of stability below the 1.10 level supports the bears to move in prices in the general path. The continued global concern about the length of the Russian war and its consequences will bring the euro dollar an opportunity to collapse to the psychological support level of 1.0800 again. On the upside, and according to the performance on the daily chart, breaking the resistance 1.1290 will be important to break the current descending channel.