EURUSD is still climbing after the recent FOMC statement, as the pair is undergoing a major forex market correction from its long-term drop. The pair is currently testing resistance at the 50% Fibonacci retracement level on its 4-hour time frame.
Stochastic is already indicating overbought conditions, which suggests that the current levels might hold as resistance and that EURUSD is ready to resume its slide. This could take the pair back down to its previous lows near the 1.0450 minor psychological support level or lower.
EURUSD Forex Market Trend
The strong long-term forex market downtrend suggests that the path of least resistance is to the downside for EURUSD, although the pair might still make a higher retracement. Take note though that price has already broken above the longer-term exponential moving average, which might be a hint that a reversal is possible.
In any case, the 61.8% Fibonacci retracement level might hold as resistance in this forex market correction since this is closer to a previous area of interest. A break past this resistance area would confirm that a potential reversal might take place. In addition, an upward crossover of the shorter-term moving average above the longer-term MA might indicate a possible uptrend.
Recent economic reports support the ongoing forex market reversal for EURUSD since data has been improving in the region. This also confirms ECB Governor Draghi’s claims that economic performance in the euro zone could recover soon and that the region is able to benefit from the central bank’s ongoing quantitative easing program.
On the other hand, while the FOMC is still moving closer to tightening monetary policy, their recent statement indicated that they might hike rates later than initially expected. This has led to disappointment among dollar bulls and a bit of weakness for the US dollar, although longer-term forex market trends are staying intact.
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