The dollar is storming ahead on the FOMC statement and Yellen’s press conference. There was no big news, but the markets snapped every hawkish note, just looking to buy US dollars. As the snowball slides, EUR/USD is falling to a new low.
The previous low of 1.2858 has been breached, with 1.2851 the new low at the time of writing. The move is certainly not finished. Here are the next levels to watch:
1.2840 is minor support: it worked as such in the past. 1..28 is already a stronger level, not only because it’s round, but because the pair bounced off this level in the past.
1.2750 served as a double bottom back in 2013 and is also a strong level. Further away, 1.2660 is a level which saw the beginning of the long term uptrend support, which was broken recently but battled upon afterwards.
On the topside, we have 1.2920, which was the initial support after the Draghi drag, and 1.2960, which was a weak upper limit within the range, ahead of the all important 1.30 level.
For more, see the euro dollar forecast.
The euro has reasons to fall. Basically, the central bank in the euro zone is about to expand its balance sheet at the same time that the Fed is stopping its expansion. This is monetary policy convergence.
In addition, Draghi explained why EUR/USD should fall. One of the reasons was a tightening Fed.
