EUR/USD: Sideways Move Probable
EUR/USD has pulled back after falling steeply following the FOMC meeting. It seems to be rising in a sort of wedge pattern now after yesterday's better-than-expected PMI data led a recovery. Today's thin data means perhaps less volatility; however, we will probably see the wedge breakdown and re-touch the 1.3158 lows. The cluster of pivots at 1.3225 including the R1 monthly and weekly, however, provide tough support and could impede more downside. An old trend-line above prices at 1.3260 could provide resistance and we will probably see a sideways consolidation unfold in the space between. A break above 1.3254 would cancel that forecast and probably see the rebound extend higher, targeting 1.3385.
Cable threatened to move lower out of the broadening formation pattern it was in but the hammer candlestick yesterday reversed the short-term down- trend temporarily. The thick jacket of support between 1.5400 and 1.5270 – made up of the 50-day, 100-day and 200-hour MA's as well as the monthly pivot at 1.5268 and the S2 and S3 weeklies underpins the hammer and stands in the way of further downside, indicating the overall tide is pointing up. It is quite possible after the strong Retail Sales data release that a reversal could take shape and a break above the 1.5529 highs would probably lead to an extension higher to perhaps 1.5595, and then possibly the 1.58s where the bottom line of the multi-month triangle is situated.
Analysis By: Joaquin Monfort, Forex4you Analyst
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