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Fed’s decision weakened the dollar

July 28, 2022

EUR/USD: The euro edged higher against the dollar on Wednesday after the U.S. Federal Reserve raised interest rates by 75 basis points, as was widely anticipated, and comments from Fed Chair Jerome Powell spurred hopes for a slower hiking path. The central bank raised rates by three-quarters of a percentage point for the second straight meeting as it attempts to rein in inflation, but noted that while the labor market remains strong, other economic indicators have softened. Despite the fact that the first reaction of the euro was to strengthen, further growth is unlikely. The divergence of monetary policies, coupled with the energy crisis, could lead to a retest of parity. Immediate support is seen at 1,0180. A breakout below could take the pair towards 1,0100.

SELL STOP 1,0180/TP 1,0100/SL 1,0210

 

USD/CAD: The Canadian dollar strengthened to a six-week high against its U.S. counterpart on Wednesday as investors weighed prospects of the Federal Reserve slowing the pace of interest rate hikes following its latest outsized increase. U.S. stock markets jumped and the U.S. dollar fell against a basket of major currencies after the Fed raised interest rates by 75 basis points.Further dynamics of the Canadian dollar will largely depend on oil. Given the growing energy crisis in Europe, oil quotes may update local highs in the coming days, which will provide additional support to the Canadian dollar. Note that oil is one of the most important export resources of Canada. Immediate support is seen at 1,2800. A breakout below could take the pair towards 1,2750.

SELL STOP 1,2800/TP 1,2750/SL 1,2820

 

GBP/USD: The British pound edged higher on Wednesday as investors bet the Federal Reserve would slow interest rate hikes following its announcement on Wednesday of an increase in rates in line with expectations.Today, the dynamics of the British currency may be affected by the US GDP report. If a recession is confirmed, the demand for the dollar as a defensive asset will lead to its growth across the board. Immediate support is seen at 1,2100. A breakout below could take the pair towards 1,2000.

SELL STOP 1,2100/TP 1,2000/SL 1,2130