EUR/USD high volatility ends

Source: Dukascopy Bank SA


The United States Federal Reserve has cut interest rates more than the markets expected. The Fed has cut 0.50% instead of 0.25%. The larger than expected USD rate cut initially caused a USD decline, as the demand for USD to pay off loans is set to decrease.

Afterwards, the Dollar recovered as soon as the press conference of the Chairman of the Federal Reserve started. In general, the Chairman of the Federal Reserve has revealed that the US monetary policymakers are aiming at sustaining low unemployment in the USA, as inflation appears to be no longer an issue for the Fed.

The EUR/USD pair reflected these events in the form of bouncing around between 1.1200 and 1.1080. By late Thursday, the high volatility appeared to be over, as the rate found support in the 50 and 100-hour simple moving averages and the weekly R1 simple pivot point near 1.1120. Meanwhile, resistance was provided by the 1.1160/1.1175 zone.

In regard to the future, a move above the 1.1160/1.1175 zone might be stopped by the 1.1190/1.1200 range and afterwards the weekly R2 simple pivot point at 1.1216.

On the other hand, a decline would have to first pass the technical levels near 1.1120 and the 1.1100 mark. Further below, note the ascending 200-hour simple moving average. If the 200-hour SMA fails to provide support, the weekly simple pivot point and the 1.1040/1.1060 range might stop a decline.
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