21.06.202108:00 Forex Analysis & Reviews: US dollar started the new week on a positive note

The US currency starts the current week on the positive side, although it expects a trick from the monetary authorities at any time. Last week, passions raged around the national currency, and the Fed provoked this. Now, experts expect that this great commotion will subside.

After the results of the Fed meeting, the US dollar showed its maximum growth, which has not been recorded since the crisis of March 2020. It managed to surpass the Euro currency, which was declining for a long time after the meeting of the regulator. However, experts are counting on the euro's recovery, which is able to turn around and attack the US dollar.

Last Friday, the market was surprised after the Fed meeting, and the EUR/USD pair was actively recovering lost positions. It can be recalled that the Fed's forecasts include an earlier than expected rise in interest rates amid the accelerating US economy and rising inflation. The regulator did not ignore the possible curtailment of bond purchases. As a reminder, the Fed is pouring $ 120 billion into the markets every month as part of this program. Analysts say that the prospect of stopping the so-called "printing press" triggered the USD rally and brought down commodity markets.

The statements of James Bullard, CEO of the St. Louis Fed, worsened the situation. He noted that the Fed could raise the rate in 2022. The official believes that the reason for this is the rapid growth of inflation, which is gaining momentum faster than the regulator expected. According to his forecast, inflation will reach 3% by the end of this year, and by 2.5% next year. In addition, the Head of the St. Louis Fed confirmed the statements of the Fed Chairman Jerome Powell regarding the possible reduction of the quantitative easing program (QE).

According to experts, the start of the discussion on the curtailment of QE will return buyers' interest in the US dollar, launching an upward trend for the next 6 months. Such a development is most likely since a turn of events was most often recorded in the market. Analysts believe that the implementation of such a scenario will provoke a market correction, returning the EUR/USD pair to the levels of 1.1500-1.1700. They believe that this process has already begun, noting that the breakdown of the support level of 1.1895 last Friday provoked a noticeable strengthening of the "bearish" mood in the pair. The decline only slowed down around the level of 1.1846, at the local lows.

On the morning of June 21, the EUR/USD pair was trading in the range of 1.1860-1.1861. Experts admit that the pair may further decline and noted that the potential bearish targets are around 1.1812 and 1.1775. This scenario is likely to be canceled if the mirror level of 1.1873 is broken, which will open the way to the levels of 1.1924 and 1.1965.

Experts believe that the EUR/USD pair will regain its lost positions and neutralize the negative consequences of the Fed meeting in the next two weeks. With the current interest rate ratio in the US and the EU, it is possible that the fair rate for the main currency pair is around 1.3000. This is facilitated by the expectation that the ECB will tighten monetary policy, which may follow in the Fed's footsteps.