Where EUR/USD headed after Powell’s speech?

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This week seems to be a defining moment for the greenback. We have had USD strength for soo long now but it seems the FOMC members are looking carefully about how close we are to the neutral rate. EUR/USD pushed to the upside following comments from Fed chair Powell stating that we may be closer to the neutral rate than the market expects. If this is the case can we expect more upside?

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  • Strong trendline break on the 1 hour chart
  • Bounce off the 0.764 Fib on the daily chart (could be the end of wave 2 Elliot Wave)
  • Retest and confirmation after the trendline break

Looking for support levels is key if you feel the bias for EUR/USD has changed to the upside. On the hourly chart EUR/USD stalled at the 0.618 Fib level and today we have seen a move lower so far this morning. I have identified some supported level on both charts above and the area between 1.1340 and 1.1350 seems strong. Price has bounced there in the past (5th Nov) and it also confluences with a Fib level (0.382%). However, there are some key risk event on the horizon. The G20 summit is this weekend, EU CPI today and also the Italian deficit is still to be resolved. As always manage your risk trading is a game of probabilities.

 

 

The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Rajan lectures for the Society of Technical Analysts at the London School of Economics and is a senior market analyst at FX Daily. He has previously worked as a fund manager and now provides commentary for some of the biggest websites in the world. Rajan analyses the main macro markets using tools like market profile, wave analysis and Fibonacci.

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