FOREX Fundamental analysis for EUR/USD on November 3, 2022
The Federal Reserve rate was raised by 75 basis points, which buyers of risky assets managed to take advantage of. However, a few minutes later, Jerome Powell shocked the pigeons by saying that the regulator was not planning to abandon its tight monetary policy course. Moreover, the rate targets originally outlined by the FOMC seem to be insufficient at the moment.
The head of the Fed believes that it is premature to think about a pause in monetary restriction. Yes, the regulator may reduce the rate hike from the next meeting, but only to analyze the effectiveness of the measures taken to combat inflation. In all likelihood, the federal funds rate will rise to 5%.
For the third time in a row, hopes for a dovish reversal have turned to losses for traders.
Increased divergence between the monetary policy of the Fed and other Central Banks will make the dollar the most sought-after currency in the medium term. Now, an optimistic statistic on the U.S. labor market is needed to keep the EUR/USD bears calm.
The "hawkish" rhetoric of the Fed has confirmed the stability of the EUR/USD downtrend. We sell the pair on a pullback with targets of 0.97 and 0.95.
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