The general message from the Fed was: the economy is a bit slower, but OK all in all. And, they also hinted about a hike in December, data dependent of course. We mentioned a sell opportunity in EUR/USD before the event and the actual outcome was a huge fall of around 150 pips, with the pair hardly clinging to 1.09.
So far, EUR/USD dropped under 1.09 and reached a new low of 1.0897. Support is at the July 20 low of 1.0808. From there, the road is open to the 12 year lows of 1.0460. A recovery could meet resistance at 1.10, the line the pair struggled to break after the huge blow from Draghi.
This is monetary policy divergence at full play: one central is gearing towards a rate hike, the Fed and we got a reaffirmation of this right now. The other one, the ECB, is getting ready for more easing, and we got that reaffirmation last Thursday. From floating around 1.1350, we are 450 pips lower within less than a week.
Tomorrow we have the US GDP, and if we tie one thing to the other, we could get a better than expected figure.
they also hinted about a hike in December
Here is how it looks on the hourly chart: a fall, a correction and a second fall.
