Richard Perry
Independent Analyst
EUR/USD
Reaction to the dovish Federal Reserve announcement would suggest that the short USD trade (which has driven EUR/USD higher) is a little tired. The resulting dollar rebound has dragged EUR/USD lower in a move that continues today. The bullish medium term outlook on EUR/USD is coming under growing pressure now. Breaking the four month uptrend (which is at 1.1825 today) the key medium term support band 1.1695/1.1750 is now coming under threat. We have previously noted that a close below 1.1750 would be a deterioration, but only below 1.1695 would be the confirmation of the strong euro position. Technical momentum indicators suggest that this is a move that is close to turning what is, for now, a trading range (between 1.1695/1.2010) into a top pattern. How the bulls respond to 1.1750 could be key to this. The hourly chart shows a failure of 1.1810/1.1825 in the wake of the FOMC decision which is now initial resistance to overcome. Continued failure under there would increase downside pressure on 1.1695/1.1750. A close under 1.1695 opens the 1.1500 area.
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