The Fed raised the policy rate by 25 bps to 4.75%-5%. However, its rhetoric is more dovish than the ECB's, which is EURUSD supportive. The spread between the German and US 2-year notes (top chart) has charted a series of higher troughs followed by higher peaks. This denotes the relative hawkishness of the ECB over the Fed. The EURUSD is sensitive to this spread with a correlation coefficient of 84%. As a result, it is not a surprise that the forex pair has also charted a series of higher troughs and a higher peak. If it moves above 1.1032, it will chart the next higher peak in its series.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.