EUR/USD falls to fresh seven-week lows as dollar keeps firmer post-Fed

<p>The pair is now starting to crack under the 1.0800 mark in a firmer manner as we look towards European trading. The next key technical test will be the 100-day moving average (red line), seen at 1.0780 currently.</p><p>This comes as the dollar is keeping firmer across the board, extending gains from the post-Fed moves yesterday.</p><p>Looking at how things are playing out for EUR/USD, a divergence can be seen in terms of traders' reaction to the central bank communication to start the year.</p><p>Powell was explicit and said that March is not likely the base case for rate cuts. As such, the odds of a rate cut for that declined from ~62% to ~35% now.</p><p>Meanwhile, the ECB continued to tip-toe around the timeline for a rate cut. The balance remains between April and June with policymakers not firming up any convictions still. And that is seeing traders still price in ~93% odds of a rate cut for April at the moment.</p><p>Going back to EUR/USD, the big test for the pair now comes from the key technical level noted above. A drop below the 100-day moving average will put sellers in prime position to chase the December low of 1.0723 next.</p><p>Once again, it looks like <a href="https://www.forexlive.com/news/dollar-demise-to-be-the-story-for-next-year-20231227/" target="_blank" rel="follow">the narrative calling for the dollar's demise</a> will have to be pushed back.</p>

This article was written by Justin Low at www.forexlive.com.