The EURUSD pair is reversing towards the 2021 trading low, around the 1.1185 level, after the FED surprised financial markets with its hawkishness on Wednesday.
FED tapering in full effect, and QE ending in March laid the foundations for more hawkish FED reserve, who also noted that a coming rate hike could come at any time.
FX pairs broke lower against the greenback Powell said: “At this time, we haven’t made any decisions about the path of policy. I stress again that we’ll be humble and nimble.”
This brings us to the EURUSD, and the current technicals. A break under the 2021 low exposes further losses towards the 1.1150 level, and possibly much lower.
Many patterns depict the potential for greater losses under the 1.1000 level. The 1.0800 area features heavily, and if 1.1000 were to break, it would be my likely target.
Next week we get the ECB which could stop the bleeding, however, safe-haven demand for the greenback could easily see the EURUSD sink in the meantime.
Sentiment is also on the side of euro bears, which leads me to believe that the EURUSD pair could be about to slide further, as 76 percent of traders are at least still bullish here according to the ActivTrader market sentiment tool.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has broken from a large ascending wedge pattern, with the wedge located between the 1.1300 and 1.1500 levels
A break under the descending wedge has caused selling and downside risks are building significantly for the EURUSD pair. As the wedge support has cracked with conviction, we should expect at least 1.1100 here.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame and the EURUSD pair is looking very bearish, and a large head and shoulders pattern, with a minimum target of 1.0800 is playing out.
In the near-term, this looks to be setting up the 1.1150 and 1.1000 levels as likely bearish targets, however, 1.0800 seems the main. 1.1400 and 1.1600 are the big weekly resistance zones if a recovery were to somehow take hold.
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