The EURUSD extended the rally post the FOMC meeting minutes in Asian and London morning trading. The high extended to 1.25709. This is the highest level since July 4th.
Looking at the hourly chart, the price has support this morning at the 1.2534 level. This is the bottom trend line which has three separate points on it (see chart above). I would expect traders are aware of this level and therefore there should be a reaction at the level.
If broken, a move below the close at 1.2527, opens the door for a test of 1.2515 (38.2% of the move down from the May 1 high. This was broken yesterday) and then 1.25007 – the midpoint of the move up from yesterdays low. Traders would probably not want to see the price extend through the 1.2480 area where there was resistance pre-FOMC (see chart above).
On the topside, if support holds against the trend line/against the close from yesterday (and so far it has), I would look for an extension higher. A parellel trend line comes in at 1.2579 currently (and moving higher). The 100 day MA (blue line in the chart below) comes in at 1.2616 today and that ultimately would be the key target above. The price has not been to this level since breaking below it on May 4th of this year. Expect the market to respect this key target on the first test.
So far activity is quiet, but traders are keeping the price above the intraday trend line support in hopes the Fed will keep the QE flowing.
