EUR/USD Plunges Amid Fed's Decision

The EUR/USD pair witnessed a significant plunge in response to the Federal Reserve System's recent decision. This move came after the announcement of the Fed's plan for three interest rate cuts throughout 2024. Let's delve into the details and the impact of this decision on the currency market.

Federal Reserve's Interest Rate Adjustments

The Federal Reserve System revealed its intention to implement three interest rate cuts in 2024, aiming to lower borrowing costs. As a result, the EUR/USD pair experienced a surge, reaching a weekly high of 1.0933 on Thursday.

Steady Interest Rate and Future Projections

Despite the planned rate cuts, the interest rate remains at 5.5% annually, marking its highest level in 23 years. This rate has remained unchanged for five consecutive meetings. Federal Reserve Chair Jerome Powell outlined the gradual reduction plan, targeting a total decrease of 75 basis points by the end of 2024.

Balanced Approach and Economic Outlook

The Fed's approach appears optimistic, anticipating a 2.1% quarter-on-quarter growth in the American economy for Q1 2024. Although there's a decrease in the Consumer Price Index, it remains relatively high. Additionally, the job market shows strength due to ongoing job creation efforts.

Inflation Target and Risk Assessment

The Federal Reserve maintains its inflation target at 2%, with risks to expectations considered balanced. This cautious approach aims to ensure stability in the economy while addressing inflationary concerns.

EUR/USD Technical Analysis

The recent developments have significantly impacted the technical analysis of the EUR/USD pair. Let's explore the key insights derived from the charts:

H4 EUR/USD Chart Analysis:

• Support found at 1.0836, leading to a corrective phase.
• Anticipated price movement towards 1.0944, followed by a potential decline to 1.0818.
• MACD indicator signals further declines, with the signal line below zero.

H1 EUR/USD Chart Analysis:

• Formation of a corrective growth structure towards 1.0940.
• Possible decline to 1.0888, followed by a potential rise to 1.0944.
• Subsequent downward wave towards 1.0818, the initial target.
• Stochastic oscillator suggests a continuation of the decline, with the signal line below 50.

Conclusion

The EUR/USD pair experienced a notable downturn following the Federal Reserve's announcement. As the Fed implements its interest rate adjustment plan, market dynamics are expected to undergo further changes. Traders and investors must closely monitor these developments to navigate the currency market effectively.

Disclaimer:?Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.