EUR USD continues the uptrend as Feds raised the rate by 50bps

The Federal Reserve raised the Fed Funds Rate by 50bps to 4.25%-4.5% in line with the market expectations, during the last FOMC meeting of 2022, followed by a drop in inflation to 7.1% as covered in our yesterday’s analysis. This pushed the borrowing cost to the highest level since 2007 and is in line with market expectations. Another important indication given by the Feds is the rates could reach 5.1% by next year. The dollar was not able to hold the earlier bounce and is pushed back down to a fresh five-month low at 103.62.

EUR/USD Chart Analysis – EUR/USD with the background of fundamental factors is up by 0.53% to 1.0683 and is now marching upwards to continue the uptrend. The pair is just trading under the key resistance level of 1.0741 from May 2022, which is also the 6-month high for the Euro around 1.07. At home in Eurozone, there is evidence that inflation is slowing down. However, it is still at quite a high level. The October month Inflation increased to 11.5% from 10.9% in September of 2022.

The chart shows that the pair has broken through the previous resistance and moved towards the test of the next resistance under the 1.07 level. The pair is moving higher in the ascending channel and prices are trading above the midline support of the channel. There could be some consolidation required before the pair breaks through the key resistance level at 1.0741. The 20-day SMA has crossed above the 200-Day SMA line and the cross would provide the push higher required for the upward breakthrough. The MACD indicator line is above the orange signal line and moving closely along with the signal line.

EUR/USD Chart Direction Bias – 1 Week

Trade Insights

The chart shows possible long positions above the major pivot level at 1.0581 with the first target of the key resistance level at 1.0741 and if Euro breaks through to further upside above the resistance level, then further long positions to test the Resistance zone between 1.0905 to 1.0939.

Alternatively, EUR/USD – Chart shows viable short positions below the major pivot level at 1.0581 to first test the key support level at 1.0421. If Euro drops below the key support, then further short positions to test the support zone between 1.0307 to 1.0248.