EUR/USD Falls After Federal Reserve - 30 October 2014

The EUR/USD pair initially tried to rally during the course of the day on Wednesday, but as you can see fell rather hard. This was mainly in reaction to a more hawkish than anticipated statement out of the Federal Reserve. With that being the case, it appears that the U. S. dollar should continue to strengthen over time, and ultimately should break down to the 1.25 level given enough time. On top of that, I believe that this market will break below that level as well, but have to recognize the fact that the level is of course a very significant support handle based upon the fact that it is a large, round, psychologically significant number.

That being said, you also have the look at the candle and the fact that a close towards the very bottom. That is of course very bearish, and as a result I believe that this pair is ready to continue going lower today. I don’t know that the 1.25 level will get broken immediately, so would not surprise me to see this market head down to that level, and then eventually struggle to break down immediately. However, given enough time I believe that the market will certainly breakdown.

European Central Bank should continue to be dovish

The ECB looks set to continue keeping a fairly loose monetary policy ahead of itself, keeping the value of the Euro lower against most currencies, but most importantly the U. S. dollar. With that being the case, it is only a matter of time before this market breaks down and I look to short-term charts as the main opportunity at this moment in time as any short-term rally should simply be a nice selling opportunity.

If you look at this chart, and have been reading my analysis, you recognize that the 1.28 level above is certainly resistive, and probably runs all the way to the 1.30 level, meaning that this is essentially a “sell only” type of market, and I will continue to do that on all time frames.

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.