- EURUSD Post-FOMC rally testing initial resistance- Constructive above 1.0640
- Updated targets & invalidation levels
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Technical Outlook:EURUSD has continued to trade within the confines of an ascending Modified Schiff pitchfork formation with the post-FOMC rally now approaching initial confluence resistance here at 1.0740/45. Looking for some pullback from these levels but the focus remains higher while above support at 1.0640- a region defined by the 100-day moving average, slope support & the March opening-range high. A breach above this resistance zone targets subsequent topside objectives at 1.0796-1.0820 and critical resistance into the upper median-line parallel (blue) / 2016 open at 1.0872.
Notes: A closer look at price action highlights near-term slope resistance with a key Fibonacci confluence just higher at 1.0757/60. The immediate advance is at risk heading into this region but we’ll favor the long-side while above the weekly open / slope support at 1.0675 (initial support 1.07) with our bullish invalidation level at steady 1.0640.
A quarter of the daily average true range (ATR) yields profit targets of 19-22pips per scalp. Added caution is warranted heading into the close of the week with the University of Michigan Consumer Confidence surveys likely to fuel increased volatility in the USD crosses.
- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-short EURUSD- the ratio stands at -1.96 (33.8% of traders are long)- bullish reading
- Long positions are 28.4% lower than yesterday and 29.5% lower from last week
- Short positions are 22.8% higher than yesterday and 27.8% higher from last week
- The current dynamic of building short-positioning as price breaks through the monthly opening rang highs keeps the broader focus higher in Euro for now. That said, we’ll favor fading weakness on a pullback in price while above structural support.
Relevant Data Releases
Other Setups in Play:
- DXY Poised For Yellen: Here’s the FOMC Game Plan
- NZD/USD: FOMC to Fuel Critical Range-Break
- EUR/CAD Pullback to be Viewed as Opportunity
- Strategy Webinar: USD, EUR Crosses in Focus as Markets Await Yellen
- Written by Michael Boutros, Currency Strategist with DailyFX