• Fed hikes rates by 75 basis points as expected could slow down in December.
• Fed Chair Powell does not sound so dovish, triggers a recovery USD recovery.
• EUR/USD dropped from 0.9970 back to the 0.9860 area.

The EUR/USD reversed sharply from the highest level since Friday at 0.9975 and broke below 0.9850, reaching the lowest level in a week at 0.9830. The words from Fed Chair Powell strengthened the greenback. 

Dovish FOMC, hawkish Powell

The Federal Reserve raised interest rates by 75 basis points on Wednesday, for the fourth time in a row. The vote was unanimous. The FOMC said it would take into account the cumulative effect of monetary tightening and the lag between the rate hikes and the impact on the economy. During the press conference, Powell said time for slower hikes may come as soon as December or February. 

After the FOMC statement the US dollar, US yields tumbled while equity markets soared. During Powell’s press conference the dollar bottomed and then started recover. It is back at the levels it had before Fed’s decision. Stocks and Treasuries gave back all gains. The moment of the reversal was when Fed Chair said the ultimate level of interest rates will likely be higher than earlier estimates. 

The EUR/USD is hovering around 0.9840, below the critical short-term support area of 0.9850, looking weak. Euro bulls need the pair to consolidate above 0.9920 in order to gain strength. 

Technical levels