US EQUITIES RALLY EVEN AFTER HAWKISH FED DECISION

American stocks rose while the US dollar slipped in the overnight session after the latest interest rate decision by the Fed. As was widely expected, the Fed decided to hike interest rates by 0.75 percentage points in its bid to fight the rising inflation. The accompanying dot plot revealed that most members of the Federal Open Market Committee (FOMC) believe that more, albeit smaller, rate hikes are necessary in the coming months. They expect that inflation will remain at elevated levels for a while, which could hurt the country’s economy.

Stocks rose even after the US published mixed economic data. Housing numbers revealed that pending home sales collapsed by 8.6% in June as mortgage rates continued rising. Other recent housing numbers like new home sales, building permits, and housing starts have also declined sharply lately. On a positive side, durable goods orders rose from 0.8% in May to 1.9% while core orders declined from 0.5% to 0.3%. The country’s trade deficit narrowed from $104 billion to $98 billion. The next important data to watch will be the latest US GDP numbers. Economists expect that the economy expanded by 0.5% in Q2 after falling by 1.6% in the previous month.

The earnings season will continue both in the United States and in Europe. Some of the biggest companies that will publish are T. Rowe Price, Franklin Resources, Sirius XM, Northrop Gruman, Southern Company, Comcast, and Mastercard among others. Like firms that have published their results this week, analysts expect that most companies will warn about the rising cost of doing business. Other important data will be the latest business and consumer confidence numbers from Europe. With energy costs soaring, analysts expect that confidence among all members worsened in July. Germany will publish its inflation data.

EURUSD

The EURUSD pair bounced back after the latest FOMC decision. It moved above the 25-day moving average while the Relative Strength Index (RSI) rose and crossed the yellow trendline. It also moved above the middle line of the Bollinger Bands. The pair will likely keep rising as buyers target the upper side of the horizontal channel at 1.0280.

EURJPY

The EURJPY pair moved sideways ahead of the latest German consumer inflation data. It is trading at 138.90, which is lower than this month’s high of 142.35. The pair moved below the 25-day and 50-day moving averages. The Relative Strength Index (RSI) moved slightly above the oversold level. The Average Directional Index (ADX) is moving sideways. Therefore, the pair will likely continue falling as sellers target the support at 137.80.

EURGBP

The EURGBP pair dropped to a low of 0.8397, which was the lowest level since May 17. It dropped below the important support level at 0.8400. It also moved between the middle and lower lines of the Bollinger Bands while the MACD and the Williams % Range have continued falling. The pair will likely continue falling as sellers target the support at 0.8350.