EUR/USD falls back below 1.0900 after Fed’s dovish rate hike

• EUR/USD stumbled and headed for the 1.0830 zone after hitting a weekly high of 1.0929.
• US jobs data suggests the Federal Reserve is not done raising rates.
• Policy makers at the European Central Bank continue to insist that more hikes are on the way.

The pair EUR/USD It hit a seven-week high but reversed back and fell below 1.0900 as the US dollar pared some of its earlier losses. On Wednesday, the US Federal Reserve (Fed) raised rates by 25 basis points, although this was perceived as dovish by market participants. This supported EUR/USD, but profit-taking traders weakened the euro (EUR). The EUR/USD pair is trading at 1.0829, down 0.17%.

Yellen’s soft tone lifted sentiment and lifted the US dollar

Wall Street ended positive. US Treasury Secretary Janet Yellen, testifying before the House, retracted Wednesday’s remarks in which she said the US government does not plan to introduce blanket insurance for all depositors. Yellen stated, “The strong steps we’ve taken ensure the safety of Americans’ deposits. We’d certainly be willing to take additional steps if warranted.”

In terms of data, the US Department of Labor revealed that the labor market remains tight, revealing the Initial Claims for Unemployment Benefits for the past week. Applications increased by 191,000, less than the 201,000 estimated by the market. The Chicago Fed’s national activity index for February fell to -0.19 from 0.23 the previous month.

Meanwhile, officials at the European Central Bank (ECB) have crossed the wires and remained hawkish. Muller said the ECB should raise rates slightly. Klas Know echoed some of his comments, adding that the ECB is unlikely to stop raising interest rates.

Sources linked to the ECB commented that policy makers are confident that the Eurozone (EU) banking system has held firm in the recent turmoil. Therefore, that would allow the ECB to resume further interest rate hikes.

EUR/USD Daily Chart

EUR/USD Technical Levels