The euro rebounded against the dollar and surged above the key $1.07 following the Federal Reserve interest rate decision and early exit polls from the Netherlands. As expected the FOMC raised the Fed Funds Target Range 25 basis points to 0.75-1.00%. They also noted they expect economic conditions will evolve in way that warrants gradual increases. The vote was not unaminous as Kashkari did not want to raise rates.
The Fed did upgrade its growth and inflation forecasts and lowered its unemployment estimate. The dollar tanked after because Fed officials only see 2 more rate hikes this year. Since the dot plot did not shift to 3 more rounds of tightening the greenback could remain under pressure as Fed Funds futures went from pricing a 60% chance of raising rates in June to below 50%.
In the Netherlands, the first exit showed PM Rutte's VVD party winning the most seats with 31 out of 150 in the lower house, while euro-skeptic Wilders' PVV getting 19 seats.
Price action on the EUR/USD daily chart shows that euro is firming up after recapturing both the 50- and 100-day SMA(s). If bullishness continues, further upside could target the 200-day SMA, which currently trades at 1.0897. Major resistance remains the psychological 1.10, it is around that area that price could form a bearish Gartley pattern. To the downside, the 1.0450. level remains major support.The trade: Buy EUR/USD at 1.0675 with a stop loss at 1.0625 and a take profit at 1.0825. The Risk/Reward Ratio is 1:3