EUR/USD Forecast: Nearing The Multi-Week High At 1.1384

• US Federal Reserve left rates on hold, will continue buying bonds over the upcoming months.
• Chief Powell committed to support the economy for as long as it takes.
• EUR/USD at fresh three-month highs and bullish, 1.1460 at sight.

A weaker dollar was the theme of the day, at least throughout the first half of it, with the EUR/USD pair reaching fresh multi-week highs at 1.1389. Caution ahead of the US Federal Reserve monetary policy meeting kept stocks seesawing within familiar levels, with European indexes edging lower, and Wall Street trading mixed. The US published the final readings of May inflation data, which was worse than initially estimated. According to the official report, the annual CPI was at 0.1%, while the core reading printed at 1.2%. The market ignored the headline, as the focus remained on the Federal Reserve’s decision.

As expected, the Federal  Reserve announced that it left the benchmark interest rate unchanged at 0%-0.25% as widely expected.  Among other things, the statement showed that policymakers will continue to buy Treasuries and mortgage-backed securities “at least at the current pace” over the coming months. The dot-plot showed that rates will remain at current levels until 2022.  Powell reiterated that the central bank is ready to use its full range of tools to support the US economy. The GDP is seen falling by 6.5% this year, yet rising 5.0% in the next.  The dollar fell with the news with EUR/USD extending its rally to fresh multi-month highs above the 1.1400 level.

This Thursday, the US will publish the May Producer Price Index, seen at -1.2% YoY, and US Initial Jobless Claims for the week ended June 5, seen at 1.55 million. During the European session, the focus will be on the Eurogroup Meeting and the EcoFIn Meeting.

EUR/USD short-term technical outlook

The  EUR/USD pair heads into the Asian session trading around 1.1400 after hitting 1.1422, retaining its bullish stance in the short term. The 4-hour chart shows that an intraday downward knee-jerk met buyers around the 20 SMA, which provides dynamic support at around 1.1320. Technical indicators, in the meantime, have resumed their advances after correcting overbought conditions, with the Momentum at fresh weekly highs, supporting another leg north towards the 1.1460 price zone, a long-term static resistance level.

Support levels: 1.1380 1.1340 1.1300    

Resistance levels: 1.1425 1.1460 1.1500

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