Last week, the Federal Reserve System not only announced the largest monetary tightening in the last couple of decades, but also began to implement this grandiose plan, raising the interest rate in the range of 0.25% to 0.50%. This left the markets in shock. Not on the rate hike, but on the plans announced by the American regulator. It took market participants some time to realize what had happened. Judging by the dynamics of the single European currency, they began to suspect something only on Friday. It was then that its gradual weakening began. The pound also began to decline with a slight delay. At the same time, the scale of the decline is extremely insignificant. At least when it comes to these changes.
During his speech yesterday, Fed Chair Jerome Powell said that if necessary, the regulator would raise the interest rate not by 0.25%, but by 0.50% at a time. And the decline of the single European currency against this background has even somewhat accelerated. And apparently, after a short respite, the market is returning to the trend to strengthen the dollar. The pound in this situation looks somewhat better than the single European currency for the simple reason that, unlike the European Central Bank, the Bank of England raises the interest rate. That is, it follows exactly the same path as the Fed. And with some advance. But it is not known where and when the British regulator will stop, since, unlike the Fed, no grandiose plans have been announced.
The EURUSD currency pair is moving on a downward trajectory from the resistance area of 1.1120/1.1180. As a result, the psychological level of 1.1000 was broken, which increased the chances of sellers for a subsequent decline. A stable holding of the price below 1.1000 may lead to further recovery of dollar positions.
The GBPUSD currency pair has not updated the maximum of the corrective move for the fourth day in a row. This led to a slowdown in the upward movement and, as a result, a lateral amplitude within 100 points. Keeping the price below 1.3100 may well lead to a change in trading interests, which in turn will lead to the recovery of the price relative to the recent correction.