EURUSD Taps Its 13-Week Highs Following the FOMC Statement; Can It Rally to Its 2020 Highs?

EURUSD rallied to its highest levels since March 10 at 1.1412 after the FOMC hinted that they did not plan on increasing interest rates until 2022. By the New York session close, the currency pair had settled with a 0.29% gain at 1.1374.

Market participants had expected for the FOMC to keep rates steady. However, given the most recent NFP figures, it would seem that a few investors were hoping for some more optimism from the central bank. While Fed Reserve Chairman Powell did acknowledge that the labor figures were promising, he warned that they may not accurately reflect the health of the labor market. He even went as far as to say that the economy may not truly begin to recover until people feel safe from the threat of the coronavirus.

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EURUSD Outlook

On the 4-hour time frame, it can be seen that the rally on EURUSD has been muted following the FOMC statement. In fact, a shooting star candlestick has formed. When you enroll in our free forex trading course, you will learn that this is considered as a bearish reversal signal. It could mean that the bullish momentum is running out of steam. If this turns our to be true, we could soon see EURUSD fall to 1.1350. This price represents a confluence of support with the rising trendline (from connecting the lows of May 25, May 26, May 27, and June 9) and the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of June 9 to the high of June 10). If support at this price does not hold, the next support could be at 1.1240 where the currency pair bottomed on June 9.

Alternatively, a bullish close above yesterday’s high at 1.1421 could indicate that the bullish momentum is still intact. We could soon then see EURUSD rally to its March 9 highs at 1.1494.

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