EUR/USD Sets Fresh 2022 Lows After the Fed
Fed Decision
On Wednesday, the US central bank maintained interest rates at 0%-0.25% and the statement noted that it would be "appropriate" to raise them "soon" [1], with Mr Powell pointing to a March lift-off, saying that "The Committee is of the mind to raise the federal fund rates at the March meeting, assuming conditions are appropriate for doing so" [2].
He also commented that there is "quite a bit of room to raise interest rates without hurting the labor market."
The central bank reaffirmed that asset purchases will end in early March and published set of principles regarding the process of reducing its balance sheet, but did not provide a specific start date.
Overall, this seemed to us like a rather contained statement and press conference, which were light in specifics. The markets reacted negatively and Mr Powell's aforementioned comment on future hikes, appeared to be the factor that sparked Wall Street decline and US Dollar's rise.
At the time of writing, CME's Fed WatchTool [3] assigns the highest probability (33.3%) to rates rising at 1.25%-1.50% in December, which would require five 25 bps increases.
EUR/USD
The pair dropped after the event and extends losses today to fresh 2022 lows, as monetary policy differential between the US Federal Reserve and the European Central Bank (ECB), remains unfavorable.
It is now exposed to the 2021 lows from November (1.1185), but the next major support at 1.1120-1.1099 may be remote at this stage.
From a purely technical prospective, the move is overextended and this could give the common currency a chance to push back towards mid-1.1200, but a strong catalyst would be required for a break above 1.1285-95 that would ease downward pressure.
Market participants will now turn to Q4 GDP and Durable Goods (13:30) form the United States.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 27 Jan 2022 https://www.federalreserve.gov/monetarypolicy/files/monetary20220126a1.pdf | |
| Retrieved 27 Jan 2022 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20220126.htm | |
| Retrieved 07 Apr 2026 https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html# |
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