US Dollar Demolished by Fed’s Dovish Pivot, Tech Setups on EUR/USD and USD/JPY

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US Dollar Demolished by Fed’s Dovish Pivot

The US Dollar suffered heavy losses this week as the Federal Reserve surprised markets with its dovish pivot. Transitioning from its previous stance of monetary tightening, the central bank signaled a more accommodative approach to support the economy amidst mounting concerns over global growth.

Implications for EUR/USD

The Euro saw a substantial boost against the US Dollar following the Fed’s announcement. Transitioning above the key resistance level of 1.14, the EUR/USD pair surged to a three-month high. This surge reflects growing optimism in the European economy as investors seek higher yields outside the US market.

Opportunities for USD/JPY

Predictably, the dovish shift by the Fed negatively impacted the US Dollar against the Japanese Yen. The USD/JPY pair experienced a sharp decline below the crucial support level of 110, reaching a six-month low. Investors turned to the Yen as a safe haven amid global economic uncertainties, further pressuring the already weakened US Dollar.

Technical Analysis: EUR/USD

Looking at the technical setup for the EUR/USD, the pair seems poised for further gains. With the break above 1.14, the Euro could continue its upward trajectory, targeting the next resistance level at 1.15. Traders should closely monitor market sentiment and any developments that could affect the Euro’s bullish momentum.

Technical Analysis: USD/JPY

From a technical perspective, the situation is gloomy for the USD/JPY pair. With the breach of the key support level at 110, further downside pressure is expected. The next significant support lies at 108, and should this level be breached, it could open the door for a more prolonged downtrend. Traders should exercise caution and closely watch for any signs of a potential rebound.

Conclusion

The US Dollar has suffered significant losses following the Federal Reserve’s dovish pivot. The Euro has benefited from this shift, while the Japanese Yen has acted as a safe haven for investors. Technical analysis suggests further gains for the EUR/USD pair, while the outlook remains bearish for USD/JPY. Traders should stay vigilant and adapt their strategies accordingly in this volatile currency market.

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