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.
