EUR/USD: Euro Sinks to $1.1450 as Jay Powell’s Presser Sends US Dollar Flying

Greenback was buoyed higher by the Fed’s message that interest rates will stay higher for longer as the risk of inflation just got more real.

📉 Euro Slides to $1.1450

• The EURUSD pair got stripped of some pips on Wednesday and continued its slide early Thursday (much to the discomfort of euro bulls). The driver behind the drop was the Federal Reserve’s interest rate decision, followed by Fed boss Jay Powell’s press conference.
• A hold to interest rates at the current 4.5% level and projections of rising inflation led to a surge of demand for the US dollar. As a result, the buck was back in fashion and roaring its way higher across the board.
• The euro-dollar pair slipped to a Wednesday low of $1.1470 from $1.1580. Early trading on Thursday saw the exchange rate hit a one-week low of $1.1450. That is, without the US buying too much dollars — it’s Juneteenth and a lot of the finance bros will be off because stocks aren’t trading.

🛒 Markets Lift Up Dollar

• The euro wasn’t the only one getting banged on the head like it’s in a game of whack a mole. The Japanese yen was getting battered, too. The USDJPY shot up above ¥145.00 all while a weaker yen couldn’t resist the selling pressure after the Bank of Japan said earlier this week it won’t be hiking rates anytime soon.
• The sterling was another victim of the dollar’s rage against the world. The GBPUSD pair was slipping for a third straight day earlier today, inching closer to the 50-day moving average.
• The UK currency is down 1.3% so far on the week and was trading under $1.34 as the Bank of England was getting ready to decide on interest rates later today — markets expect a hold at current levels.

🔥 It’s Bulls vs Bears Once Again

• Back to the euro — the old continent’s currency is drifting further away from its three-year high against the buck. Last week, the pair crossed $1.16 for the first time since February 2022. The powerful swing brought its year-to-date performance to a whopping increase of more than 12%.
• The solid score has bulls convinced that what’s going on now is but a blip on the chart, a short-term correction for the euro to pause for breath and carry on with its quest to higher grounds.
• The bears, however, are there to try and figure out where the top might be and build up their sell walls in efforts to get the dollar in the spotlight and on top of the leaderboard.