EURUSD: Another test of the trend lows coming up? by FX Charts

The dollar generally recovered ahead of the FOMC, unexcited by the EU CPI which came in as expected at 0.3% yy and then ignoring the weaker than expected US CPI, with the Euro falling to a low of 1.2385 before a small bounce to 1.2400. Elsewhere the Russian Ruble has made a partial recovery, trading at close to 60.00 right now against the dollar, having yesterday reached 79.51.The FOMC meeting has removed the term “considerable time” from the statement and has replaced it with a need for “patience”, thus keeping their bets fairly open with the forward guidance really more or less unchanged. This mildly dovish tone has seen the dollar give up some of its ground, currently trading at 1.2440 at the time of writing, as it appears as though the Fed will retain an accommodative stance for a more extended period of time than previously considered likely. The general consensus though is that there will be a rate rise at some stage in 2015 with the jobs market in particular heading in the right direction. Janet Yellen’s press conference while being very cautious has a positive tone and has seen the dollar head to new session highs at the time of writing.

The downside will find bids at minor Fibo support 1.2325 ahead of 1.2300. Below here would head back to the trend low at 1.2246 which in turn lies just ahead of the next major level at 1.2225 (200 Month MA) and will act as strong support.

As we said before, if/when the 200 MMA is taken out, the Euro would then head towards  the major rising trend support (joining the 2005, 2010, 2012 lows) at around 1.2140, and then to 1.2100 which is the 50% pivot of the rally from the Euro Oct 2000 low to the July 2008 high and again, should also provide decent support. Under that, which would see the long term head/shoulder neckline being broken, we have the July 2012 low at 1.2041 and the June 2010 low 1.1876, which both come ahead of 1.1743, where the Euro was initially pegged to the dollar in January 1999.

The immediate resistance now comes at comes at around 1.2380 (minor), above which see a return above 1.2400 and beyond towards 1.2470 and then to the session high at 1.2515, although this is now looking rather distant. Above 1.2515 would then head towards the pink descending trend resistance line at 1.2570, and with the dailies pointing higher then look for the chance of a run up to the 19 Nov high at 1.2490.   A break of 1.2500 would  trigger stops to potentially take the Euro on towards the 26 Nov high at 1.2531, above which, the first major Fibo resistance is not seen until we reach 1.2590 (23.6% of 1.3699/1.2246), with the greater Fibo level not seen until 1.2656 (23.6% of 1.3993/1.2246).

Watch out later today for the German IFO and the US flash Services PMI and the Philly Fed Mfg Survey

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