Key Takeaways

  • Euro declines as the US dollar dominates following a “higher-for-longer” Fed stance
  • Potential double bottom pattern emerges as EUR/USD pair drops near $1.05 level

5-Day Losing Streak

The euro declined below the $1.0600 threshold earlier today. The drop, hitting a 7-month low at $1.0569, builds on a five-day streak of losses, or the lowest level unseen since March.

The EUR/USD pair has lost more than 6% of its valuation since July as the stronger US dollar has dominated across the forex board. The most recent catalyst in the dollar’s quest for higher grounds was last week’s Federal Reserve meeting. 

In it, Fed Chair Jay Powell eased investor’s concerns by skipping a rate hike. The central bank boss did say that Fed officials are convinced at least one more interest-rate hike will be needed this year to stamp out stubborn inflation.

That said, the Fed vowed to keep rates “higher for longer,” which meant that the current 5.25% to 5.50% benchmark rate will not be coming down any time soon. The expected flatlining in the interest rate made the dollar more attractive to investors seeking better returns, which drove up the value of the greenback.

Potential Double Bottom

The EUR/USD pair had previously reached a significant low of $1.0530.Yesterday’s close at around $1.058 extended a downward pattern, indicating bearish market sentiment. In that context, traders should diligently watch for a “double-bottom” pattern to potentially be tested if the pair reaches its previous low, seen back in March.

A leader among the “Majors”, the EUR/USD pair is part of a group of the most popularly traded currency pairs, which is why it is imperative that traders and analysts monitor it closely.