Euro up after Fed rate hike

The EUR/USD rose modestly from 1.1050 to 1.1079 after the Federal Reserve announced a 25 basis point rate hike and the US Dollar dropped modestly after the decision as US yields moved sideways which seems to suggest that traders believe the US central bank is nearing the end of their rate hiking cycle.

The Fed raised its key interest rate to 5.25%-5.5%, the highest level in 22 years. The statement contained little changes compared to the previous meeting, and the vote in favor of the rate hike was unanimous. Now attention turns to Chair Powell's press conference. He is unlikely to declare an end to the hiking cycle and will reiterate that the Fed's policy is on a data-dependent path.

On Thursday, the European Central Bank (ECB) will hold its Governing Council meeting. A 25 basis point rate hike is currently priced in, but the focus will be on any signs about the future path of monetary policy. Following the ECB decision, important US economic data will be released, including the first reading of Q2 GDP growth and the weekly jobless claims report.

The EUR/USD remains within an intraday range, with support at the 1.1050 area and limited around 1.1080. A decline below 1.1050 should add bearish pressure, initially exposing the daily low at 1.1037 and then the weekly low at 1.1020. On the upside, the Euro faces resistance around 1.1090. If it breaks above, more gains above 1.1100 seem likely, with the next resistance seen at 1.1115.