- SWFX market sentiment is 55% bearish
- 51% of pending orders in 100-pip range are set to SELL
- 52% of traders are bullish on the Dollar
- Upcoming Events: ECB Meeting, US Core Retail Sales
In result of the Federal Funds Rate hike the currency exchange rate surged by 0.5%. Today the surge of the rate is likely to continue, even though in larger perspective the pair is expected to continue moving in southern direction.
The Euro strengthened against the US Dollar, as most of the releases matched expectations on Wednesday. The EUR/USD currency pair added 28 pips, to continue appreciation and reveal one more 22 pips jump, following the Fed interest rate decision.
The Labour Department stated that the US consumer prices slowed growth to 1.7% year-on-year in November, held down by a strong decrease in apparel prices and weak costs of healthcare, which is likely to determine the pace at which the Fed hikes rates next year. Later, the Federal Reserve announced its decision to raise rates to 1.50% from 1.25%, as widely anticipated, but kept future projections unchanged, despite a possible short-term jump amid Trump's proposed cuts of tax.
ECB decision
Just in one day after the Fed meeting, the ECB will also gather together and discuss the prospects of the Minimum Bid Rate hike. The raise itself self is not expected, although the clues about monetary policy for the next year might cause notable volatility in the market. In addition to that, there is a need to pay attention to release of information on the US Core Retail Sales at 13:30 GMT.
EUR/USD jumps by 44 points amid rate hike
As the currency rate was falling the last three weeks in a row, traders used the Federal Funds Rate hike to sell the Dollar and elevate the pair to the 1.1844 level. As long as market sentiment remains predominantly bearish the rate is expected to continue moving in southern direction. As for today, a deep plunge back to 1.1776 seems unlikely, as this road is obstructed by the weekly and monthly PP as well as the 200-hour SMA. From this perspective, the pair most probably will make another rebound and resume the upward movement towards the upper boundary of a medium-term descending channel. However, there is a need to take into account an effect from today's ECB meeting and American data release, which are likely to alter the above scenario.
Hourly Chart
In result of the Fed decision, the currency rate ended previous trading session above the monthly PP, the 100-day SMA and the 50% Fibonacci retracement level. Accordingly, the pair is expected to continue moving upwards towards the 1.1860 level.
Daily Chart
Market sentiment is bearish
In result of the previous trading session the bearish market sentiment slightly increased, as 55% of open positions are short now.
In the meantime, the outlook for the two currencies against the rest of the traded financial instruments is the following: the Euro is 60% bearish and the Dollar is 52% bullish.
Traders of OANDA remain bearish, as 56% (-2%) of open positions are short. Meanwhile, SAXO are bearish on this currency pair with 57% (+4%) of open short positions.
Spreads (avg, pip) / Trading volume / Volatility