EUR/USD rises towards 1.10 ahead of the Fed rate decision
EUR/USD is on the rise for a third straight session, boosted by optimism surrounding the Russia Ukraine peace talks. Ukraine President Volodymyr Zelenskyy said that talks were sounding more realistic, but more time was needed.
Attention is now firmly on the Federal Reserve interest rate decision due later today. The Fed is expected to hike rates by 0.25% in the first increase since 2018.
The move comes as inflation is soaring higher, currently four times the Fed’s 2% target, and as growth is expected to slow amid the fallout from the Ukraine war.
A rate hike followed by a dovish message highlighting uncertainty could pull the USD lower.
Where next for EUR/USD?
EURUSD has rebounded off the 1.08 low but has since run into resistance and has been relatively range-bound.
The receding bearish bias on the MACD could suggest more upside to come. However, recent relatively subdued price moves warrant caution before placing aggressive bets.
Resistance at 1.1020 is the first upside target, the overnight high, ahead of 1.1045 Friday’s high before opening the door to 1.1120, a level which has offered support and resistance several times over the past few months.
On the downside, 1.09 is seen as the immediate support ahead of 1.0850 and 1.08 the 2022 low.
WTI crude oil rises after 11% declines in 2 days
After falling 11% over two days, oil prices are edging higher on Wednesday. Oil markets are weighing up several factors creating plenty of volatility.
While sanctions on Russian oil sent prices surging, optimism surrounding peace talks between Russia and Ukraine has helped lower the price.
Concerns over demand have also dragged oil prices lower as China locks down cities amid the spread of Omicron. Furthermore, high oil prices will also naturally dampen demand.
API data showed that inventories rose by 3.8 million barrels, but gasoline inventories fell by 3.8 million barrels.
EIA data is due later. The Fed rate decision will also be watched. Higher interest rates and a stronger USD could dampen demand.
Where next for WTI oil?
WTI oil rebounded lower from the $130 high before finding support on the 50 sma. The price has picked up from this level and is attempting to re-enter the rising channel it had been trading since late December.
A move back into the channel would bring the critical psychological level of $100 back into play.
Meanwhile, sellers will notice the bearish crossover on the MACD, which could suggest that there is more downside to come. Immediate support can be seen at 94.70 ahead of the 50 sma at 92.40, bringing the 90.00 round number into play.
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