The EUR/USD pair tumbled to its lowest level since 2002 on Wednesday after the Federal Reserve decided to raise interest rates by 75 basis points for the third time in a row, taking the fed funds' range to 3.0%-3.25%, as expected.
The EUR/USD bottomed at 0.9812 as the knee-jerk reaction but bounced toward the 0.9900 area during Jerome Powell's press conference. At the time of writing, the pair is trading at the 0.9840 area, recording a 1.3% daily loss.
Chair Powell reinforced his hawkish rhetoric. He assured the FOMC's commitment to bring inflation down, stating that it is the Fed's sole job. He confirmed that ongoing data-dependent rate hikes may be appropriate and that the committee is willing to maintain the funds' rate at a restrictive level and keep them higher "for some time" to restore price stability.
According to the median projections and the so-called dot plot, the members of the FOMC are seeing the funds rate at 4.4% by the end of this year (1% higher than June's projection), 4.6% in 2023, 3.9% in 2024, and 2.9% in 2025. The PCE inflation forecasts where adjusted to 5.4% in 2022, 2.8% in 2023, 2.3% in 2024 and 2% in 2025.
From a technical perspective, the EUR/USD pair holds a short-term bearish bias according to indicators on the daily chart. The RSI and the MACD remain in negative territory while the price develops below its main moving averages.
On the downside, the 0.9812 low is the immediate support level. A break below this level could pave the way toward the 0.9700 area. On the other hand, short-term resistances line up at the 20-day SMA, currently at around 0.9983, followed by the parity level and the 1.0100 zone.