EUR/USD analysis: Fed opened doors for a test of 1.1800

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1735

The EUR/USD pair traded uneventfully around the 1.1640 level, and after falling down to 1.1612, its lowest for the week, but resumed its advance breaking higher and settling at its highest since January 2015, in the 1.1730 region, following the US Federal Reserve monetary policy meeting. The Central Bank failed to surprise investors, keeping rates unchanged, as largely expected and barely changing the wording on the statement, particularly when it comes to reducing the $4.5 billion balance sheet, saying that it will start "relatively soon," and the market understanding it as September. As for inflation, policy makers still believe that it will “stabilize around the Committee’s 2% objective over the medium term," while the labor market has continued to strengthen. With no signs of accelerating its tightening pace, the market resumed dollar's selling, with the greenback now trading at fresh multi-month lows against most of its major rivals.

As for the EUR/USD pair technical outlook, the price has regained ground above its 20 SMA in the 4 hours chart, whilst technical indicators turned sharply higher, maintaining their upward slopes within positive territory, and supporting further gains ahead on a break above the 1.1710 price zone, where the pair topped this week and back in 2015. Beyond the level, the rally could extend up to the 1.1800 price zone, where the pair has its 200 SMA in the weekly chart, and the top of the daily ascendant channel coming from mid-April with little in the way. A reversal in the ongoing bullish trend has become more unlikely, but intraday downward corrective movements can't be disregarded. Still, the pair will remain bullish even in the case of a decline down to 1.1580.

Support levels: 1.1690 1.1650 1.1615

Resistance levels 1.1745 1.1790 1.1840

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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