Daily Analysis EURUSD - 19 June 2023

Last week, the ECB and the Fed meetings showed that both central banks are still hawkish and unconvinced about the slowdown in inflation in both economies. This is mainly due to the tight labor market and inflation levels that are still far from the 2% target.

The Fed decided to keep the rate unchanged, pausing to assess the current economic conditions and data before considering further hikes. The current rate stands at 5-5.25%, and its impact on business conditions is being carefully observed. However, the Fed maintained a hawkish tone, signaling that more rate hikes are likely, especially considering the majority of the 18 members voted for them, as indicated in the Dot plot.

On the other hand, the ECB's decision to increase rates clearly indicates that they are not finished yet. They have not defined where they will stop, as their assessments still favor more rate hikes until a clear drop in inflation levels can be observed.

The price action of the EURUSD showed a bullish movement, with the price increasing by close to 2% in just two days. This movement has not been seen for over four months. The resistance level is at 1.0950, and the pair is currently correcting it. The next support level is around 1.0880, followed by 1.0860.

 

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.1050	1.1000	1.0950	1.0912	1.0860	1.0800