Market Analysis: The US Dollar Weakens After the Fed's Decision to Raise Rates

<img src="https://fxopen.com/blog/en/content/images/2023/07/USD1.jpg" alt="Market Analysis: The US Dollar Weakens After the Fed's Decision to Raise Rates" /><p>After the 11th increase, the interest rate reached 5.5%.</p><p>At the same time, the US dollar weakened because:</p><ul><li>market participants may consider this to be the last hike in the cycle (although Powell admitted the possibility of a rate hike in September);</li><li> the Fed is no longer considering a recession scenario, which has reduced the relevance of cash as a defensive asset. Reuters reports analysts saying Powell&apos;s tone has become more dovish.</li></ul><p>The weakening of the US dollar led to an increase in the prices of currencies traded in tandem with the USD. Thus, the EUR/USD rate rose by 0.75% from the low of the week, where the support block is located:</p><ul><li>level 50% of growth A→B;</li><li>median line of the ascending channel (shown in blue);</li><li>level 1.02, which worked as a resistance in June.</li></ul><p>At the same time, the nearest resistance is at the level of 1.111, which was support last week. Pay attention to the rate of decline in the price on the EUR/USD chart on the 20th and 24th — a sign of the initiative of the bears. Will they be able to break through the support block, or will the bulls intend to use it as a support for a new swing within the channel shown in blue? There should be more arguments for reasoning after the news from the ECB is released today at 15:15 GMT+3.<br></p><figure><img src="https://lh4.googleusercontent.com/jsxRFoqL0taM1miCW4kAsPPXM9i3d7gKnhCRlQC4G-LDbSr-JIhfIDe8VFZyh2GkpSnMw_ArclpGORjGdWV1SlY8uxkExTTAXV3xtZVgyOD9JlQDJAu9p2Mz_ZCskxvlEQxQOFxUE2aFnAnJsGkFQ98" alt="Market Analysis: The US Dollar Weakens After the Fed's Decision to Raise Rates" loading="lazy" /></figure>