The currency pair extended its downwards movement after the FOMC announcement. It has dropped as low as 1.0616, but then it has bounced back and is located at 1.0657 at the time of writing. After such an impressive sell-off, a rebound was somehow expected, as the rate could try to test and retest the immediate resistance levels before going down.
Fundamentally, the US economic data came in mixed earlier. The Unemployment Claims, Current Account, and CB Leading Index came in better than expected, while Existing Home Sales and Philly Fed Manufacturing Index disappointed. Surprisingly, the Euro took the lead in the short term even if the Eurozone Consumer Confidence was reported at -18 points versus -16 points estimated. Still, the rate turned to the upside only because the Dollar Index retreated.
EUR/USD Sell-Off Paused
Technically, the EUR/USD pair crashed after failing once again staying above the median line (ML). Escaping from the flag pattern signaled a deeper drop.
Now, it has found support on the 1.0631 historical level, and it tries to come back higher. Still, the downside pressure remains high, so the bullish momentum could be only temporary.
EUR/USD Forecast
Dropping and closing below 1.0631 and making a new lower low activates more declines. This is seen as a bearish signal.
