On the daily chart below for EURUSD, we can
see that the price managed to break above the 1.08 handle as the Fed
delivered on expectations although it sounded less hawkish. The reason is
that the Fed is fearing that the recent events in the banking sector may slow
the economy without requiring the Fed to raise rates much further.
This was taken as a dovish move
and as the market sensed the end of the hiking cycle, the US Dollar lost across
the board. The US economic data recently continued to be strong though and this
may give the USD a boost once the market switches its focus from the banking
problems back to inflation.
For now, the momentum is tilted
to the upside as depicted by the moving
averages crossed to the upside.
On the 4 hour chart below, we can
see that the upward channel has been broken once we got the blowout top caused
by the FOMC decision. The following days the price started to fall and led to
the breakout.
This may be due to the buyers
covering some longs after such a strong week-long rally or due to the better
than expected US data. It’s unclear yet, so the technicals are important to
manage well risk.
The moving averages on this
timeframe are crossed to the downside, which may be an early signal of a change
in trend, but we may need a fundamental catalyst first to confirm it.
On the 1 hour chart below, we can
see that the price is trading within a channel. This may end up to be a bearish
flag pattern, where the price breaks lower and continues the
downward trend.
The sellers, may want to wait for
the breakout first before piling in. The buyers, on the other hand, will need a
break above the 61.8% Fibonacci
retracement level to invalidate the short setup and keep
charging higher.