The Single currency drops towards 1.1630 as the Federal Reserve maintains its bullish outlook on the market. Although the Fed did not increase interest rates this month, they preserved their plan to hike rates two more times this year, in both September and December. Interestingly, Fed Powell dodged Trump's remarks regarding the Fed rate hike policy and stated clearly that he U.S economy is looking “strong”. We believe that the Fed's hawkishness is justified given that the most recent GDP growth figure printed at 4.1% and the most recent PCE Deflator figure printed slightly above 2% in line with the Fed's inflation target. As bond yields in the U.S increase, the greenback is expected to continue to strengthen and thus apply further downward pressure on the Euro.
The Euro breaks both the 1.16681 and 1.16480 support levels and drops aggressively. Adding to the bearish momentum, the Euro broke down below both the 50-period moving average and the 200-period moving average. A break below the next support level at 1.16161 will signal further downside towards the 1.15 range.
Support: 1.16161 1.15750
Resistance: 1.16480 1.16681