The Fed unexpectedly moved forward the timeline to normalizing monetary policy. The move sent the USD surging higher, pulling EUR/USD down to 1.20. The Dax traces Wall Street lower post Fed.

EUR/USD falls back to 1.20 post Fed, EZ CPI up next 

EUR/USD slumped on Wednesday as the USD rallied following the hawkish turn from the Federal Reserve. 

The Fed surprised the market by signaling that it might raise interest rates  at a much faster pace than initially anticipated.  

The dot plot showed the Fed hiking interest rates twice in 2023 as opposed to 2024.  

GDP & inflation expectations were also upwardly revised. 

Attention will now turn to Eurozone inflation data. Eurozone CPI is expected to rise 2% YoY, & 0.3% MoM in May (EZU). 

US jobless claims are also due. 

Where next for EUR/USD? 

EUR/USD tumbled over 1% in the previous session. It trades below its descending trendline, and fell through its 50 day ma. However the pair managed to find support from the 200 day ma at 1.1990 and is currently hovering around the 1.20 round number mark (FXE, UUP). 

The bearish MACD is keeping sellers hopeful of further downside. 

Any move lower would need to break below the 200 sma at 1.990, which could open the door to 1.1950, high March 22, low April 19. A break through here could bring 1.19 round number into target.  

Any meaningful recovery would need to first clear the 1.20 psychological level, although moves higher could be seen as selling opportunities. Resistance can be seen at 1.21 the 50 SMA. It would take a move above 1.2130 to negate the current down trend.   

Dax trades under pressure 

European indices are slipping lower after a weaker close on Wall Street.  

The Fed upwardly revised US GDP & inflation and accelerated the timetable to normalizing monetary policy. 

The surprise move sent equities lower. Stocks had surged to record highs on cheap money and easy central bank policy. 

Where next for the Dax? 

The Dax had been grinding higher, hitting an all time high earlier in the week. A rising wedge pattern had formed over the past month, which points to a reversal. The pattern is associated to the likelihood of falling prices (DAX). 

The Dax has broken out below the lower trendline. The bearish MACD is also keeping sellers hopeful. However, it would take a move below 15550 to negate the current near term uptrend. A break through this level could see the sellers gain traction and head towards the 50 sma and horizontal support 15380. 

On the flip side, a move back over 15700 trendline could see the Dax make a fresh attack on its all time high.