Well, the Fed disappointed the market with its moderate comments on and its commitments to reduce the . Investors took its passion for balance reduction as an alternative to rate hikes.
That’s why the chances of the fed funds rate hike before the year end slid to 45%. It means the major part of the market doesn’t believe in further rise of borrowing cost. This is a good reason to sell USD.
Meanwhile, everybody is waiting for more hawkish hints from the ECB, as stimulus removal is expected this Fall. And every strong European report may only confirm the expectations, driving EUR higher. The current euro retracement is triggered by profit taking after a huge rally, and it gives perfect opportunity to enter the market with longs.
The next target for EURUSD may be at 1.1780 followed by 1.1820.