• The US Federal Reserve hiked rates by 75 bps.
• The central bank acknowledged that spending and production “softened.”
• EUR/USD: Initially reacted to the downside but is seesawing around 1.0120-50.

The EUR/USD edges higher after the US Federal Reserve decided to hike rates by 75 bps, lifting the Federal funds rate (FFR) to the 2.25-2.50% range, as the US central bank acknowledged that production and spending “have softened.”  At the time of writing, the EUR/USD is seesawing around the 1.0120-50 range.

Summary of the FOMC monetary policy statement

Fed officials, in their statement, acknowledged that the labor market is robust. Nevertheless, they mentioned that production and spending had taken their toll due to higher rates, which was perceived as slightly dovish per traders’ reaction.

Regarding inflation, the central bank said that inflation remains elevated and had broadened further while blaming the Russia-Ukraine war created additional upward pressures on inflation. So in reaction to that, the Federal Reserve hiked rates and anticipated that “ongoing increases in the target range will be appropriate.” Additionally, the Fed reiterated that it is “strongly committed to returning inflation to its 2 percent objective.”

In the meantime, the Fed will continue reducing its balance, as planned in the Plans for Reducing the Size of the Fed’s Balance Sheet, issued in May.

EUR/USD Market’s reaction

The EUR/USD reacted downwards to 1.0120, before rallying towards 1.0150, before settling around current price levels as Chair’s Powell press conference is about to begin.

Press conference here: Fed Press Conference: Chairman Jerome Powell speech live stream – July 27

EUR/USD Key Technical Levels