EUR/USD: The euro gained against the dollar on Monday as investors digested last week’s surprise hawkish shift by the U.S. Federal Reserve. The U.S. dollar index fell 0.43%, as investors weighed whether the Feds stance will mean a pause in the greenbacks bear trend. Several Fed officials have speaking duties this week, including Chair Jerome Powell, who testifies before Congress on Tuesday. The euro traded above its lowest against the dollar since April 6 at $1.1895 on Monday, dropping from as high as $1.2145 last Tuesday. Immediate resistance can be seen at 1.1926. An upside breakout can trigger a rise towards 1.20.
GBP/USD: Sterling kept climbing against the dollar on Monday, recovering from its last week’s decline to its lowest level since April after the U.S. Federal Reserve surprised the market with a hawkish tone last week. A more optimistic economic assessment from the Bank of England, which next meets on Thursday, could push sterling towards $1.40 quicker. Currency markets are fully pricing in a 30 basis point hike in rates by the Bank of England by December 2022. Investors are also watching a dispute between Britain and the European Union over post-Brexit trade in the British province of Northern Ireland. Immediate resistance is located at 1.3935. The breakout to the upside can trigger growth towards 1.40.
USD/JPY: The dollar gained against the yen on Monday after the Fed surprised markets last week by signaling it would raise interest rates and end emergency bond-buying sooner than expected. Minneapolis Federal Reserve President Neel Kashkari said on Friday he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023 to allow the labour market to return to its pre-pandemic strength. Today, the dynamics of the dollar will be influenced by Powell’s speech before Congress. Strong resistance is found at 110.50. The breakout up can trigger a rise towards 111.00.