EURUSD and GBPUSD continue their recovery

EURUSD chart analysis

Yesterday’s increase in interest rates from 0.25% to 0.50% did not help the dollar, and for now, we have a bullish continuation. Pair EURUSD is currently at 1.10500, and we have no indication that the trend will change. Moving averages support this bullish movement, and we can look at 1.12000 as the next big resistance zone. Before that, we have a 1.10000 level, March high as a smaller resistance zone. For the bearish option, we need a pullback to 1.10000. A break below would boost the bearish momentum, and potentially additional support at that level are our MA50 and MA200 moving averages. Below, the next support is at 1.09000, then 1.08000 level, March and this year’s minimum. The previous time we were here was in May 2020.

GBPUSD chart analysis

The pound is also advancing against the dollar. We are now very close to the 1.32000 level and testing the previous high. We have the support of all moving averages, and it is very important that we are above the MA200 moving average. Our next target is at 1.32500, the previous high from March 6th. And here, we are very close to a potentially large resistance zone around 1.32750. For the bearish option, we need a new negative consolidation and withdrawal towards the previous support zone at 1.31000. By going below the moving averages, the bearish pressure will increase, and after that, we can expect a further descent towards the 1.30000 psychological level.

Market overview

BOE and EU news

The Bank of England is expected to raise its key rate for the third meeting in a row on Thursday, as inflation is likely to accelerate more than expected due to higher energy prices in the middle of the war in Ukraine.

Inflation in the eurozone has risen more than originally estimated in February, final Eurostat data showed on Thursday.

Inflation rose to a new record 5.9 percent in February from 5.1 percent in January. The rate was revised by 5.8 percent.

FED news

The US Federal Reserve has raised its reference interest rate to face inflation, the highest in 40 years, and the prospect of it deteriorating due to the Russian invasion of Ukraine.

The Fed decided to raise the short-term interest rate by 0.25 percentage points so that it would be between 0.25 and 0.50 percent, and the decision was made by the Monetary Policy Committee almost unanimously.

The US Federal Reserve said that economic activity and employment have continued to strengthen since the last meeting on January 25 and 26. But the bank pointed out that inflation remains high with uneven supply and demand. The monetary institution forecasts inflation of 4.33 percent in 2022, which is almost twice as much as it was forecasted at the end of January.

After a two-day meeting, the Fed’s monetary policy committee pointed out the risks posed by Russia’s military invasion of Ukraine and sanctions.

“In the short term, the invasion and related events could put additional pressure on rising inflation and negatively affect economic activity,” the statement said.

Bank officials predict an additional increase in the interest rate this year, and a smaller increase in gross domestic product for 2022 than previously forecast, expecting it to be 2.8 percent instead of 4.0 percent as previously planned. In March 2020, the Fed almost lowered its interest rate to zero to support the economy, which was then facing the spread of covid-19.

However, the American economy has been hit by a wave of rising prices in the last year. Fed President Jerome Powell said that the institution will do everything it can to curb inflation without blocking economic development at the same time.