The Fed hints signals pause in easing, what’s next?

The Federal Reserve cut rates as expected and signaled a pause in its easing cycle. At the same time, Powell highlighted that the central bank would need to see a significant move up in inflation before they could consider raising rates. The dollar was hit hard by this statement and suffered losses across the board. As a result, EURUSD jumped to 1.1150 and extended gains to 1.1170 early on Thursday.

Now, as investors have nearly digested a rather neutral message from FOMC, market attention shifts to fresh economic updates, both out of the Eurozone and the United States. As such, the European CPI and GDP data could affect the euro’s dynamics in the short term, while in the US, personal spending and income will be in focus. But the key release is the NFP employment report due on Friday. The ADP numbers were solid enough, and should the upcoming data come on the positive side as well, the greenback could receive a boost and stage a local recovery at the end of the week.

EURUSD needs to clear the 1.1180 area which is standing on the way to the 1.12 psychological level, where the 200-DMA lies. This resistance area is fairly strong and could send the euro lower after four days of gains, which will depend on the above mentioned data. Should the USD demand pick up again, the pair could get back below the 100-DMA around 1.1120.