EUR/USD:FUNDAMENTALS NEWS + TECHNICAL ANALYSIS | SHORT 🔔EUR/USD has preserved its recovery momentum after Fed's policy announcements.
Euro could continue to push higher in case 1.1050 turns into support.
A negative shift in risk mood could limit the pair's upside.
EUR/USD has regained its traction after dipping below 1.1000 with the immediate reaction to the US Federal Reserve's policy announcements. The pair consolidates Wednesday's gains near 1.1050 early Thursday and it looks to extend its rebound toward 1.1100 in case this level turns into support.
As expected, the Fed hiked its policy rate by 25 basis points and the updated Summary of Economic projections showed that policymakers expect to raise the rate six more times by the end of the year. Despite the hawkish policy outlook, FOMC Chairman Jerome Powell reassured markets that they would tame inflation without hurting the economic activity and allowed risk flows to dominate the markets.
Reflecting the negative impact of Powell's comments on the greenback, the US Dollar Index fell 0.6% on Wednesday.
Nevertheless, the Fed is clearly planning to tighten the policy in a much more aggressive way than the European Central Bank (ECB) does and the policy divergence should continue to favour the dollar over the euro moving forward. Hence, it's too early to say whether EUR/USD could go into a steady uptrend in the near term.
Meanwhile, markets remain on edge despite Russia's optimistic rhetoric about a peace agreement with Ukraine.
Russia reportedly thinks that they made significant progress toward a ceasefire but Ukrainian officials disagree with this view. In the opinion of France's Foreign Minister Jean Yves Le Drian, Russia is only "pretending to negotiate with Ukraine."
US stock index futures are posting small losses in the early European session and a negative tilt in the risk mood could make it difficult for EUR/USD to stretch higher.
Later in the session, weekly Initial Jobless Claims and February Industrial Production data will be featured in the US economic docket but the risk perception is likely to impact the pair's action in the remainder of the day.
