EUR/USD falls into 1.0660 as Greenback bolstered by Fed

• The EUR/USD has rapidly reversed Wednesday's direction after getting knocked lower by Fed rate call.
• Fed keeps rates at 5.5%, but sees at least one more rate hike by the end of 2023.
• Markets have piled into the USD after the Fed updated its forward-looking rate expectations.

The EUR/USD is sharply off the day's highs of 1.0735, trading into the low end and chalking in a new low for Wednesday near 1.0650.

The Federal Reserve (Fed) updated their Summary of Projections (SEP), which shows Fed officials expecting the interest rate to hit 5.1% by the end of 2024 (previously 4.6%). Despite the Fed holding steady on rates at 5.5% for the time being, the uptick in the rate of interest rate cuts has sent the US Dollar broadly up across the board.

Read more:

Fed delivers a hawkish pause, promises higher for longer rates

Jerome Powell speaks on monetary policy after deciding to hold interest rate steady

Fed dot plot points to one more 25 bps hike in 2023 and 50 bps cut in 2024

Up next on the economic calendar, US Initial Jobless Claims are slated for Thursday at 12:30 GMT, and the figure is expected to print slightly higher at 225K versus the previous 220K.

Forex Today: US Dollar strengthens after Fed’s hawkish pause

Friday sees Purchasing Manager Index (PMI) figures for both the European Union (EU) and the US. EU Composite PMI is forecast to dip slightly to 46.5 from 46.7, while the US side is anticipating a minor improvement. The US Manufacturing PMI is expected to tick up from 47.9 to an even 48.0, while the Services component is anticipated at 50.6 versus the previous 50.5.

EUR/USD technical outlook

Wednesday's Fed-sponsored decline in the Euro-Dollar pairing sees the EUR/USD giving up most of the gains for the week, trading into the 1.0660 level after getting knocked back.

Price declines in the pair are starting to accelerate from a descending trendline on the daily candlesticks, marked in from July's swing high near 1.250.

The 200-day Simple Moving Average (SMA) also rests above current price action, turning flat near 1.0830. 

Continued selling pressure from here will see the EUR/USD set to close in the red for a tenth straight week and set to challenge the year's lows currently marked in near 1.0500.

EUR/USD daily chart

EUR/USD technical levels