EURUSD gets some bearish relief from the Fed and Dutch elections
Twas a good day for the euro yesterday but the real test comes in the aftermath of two events. On the dollar side, the weakness was a big factor and on the euro side, the Dutch elections have calmed some nerves. The populism movement is far from over but what the Dutch election has shown is that the majority of people are a long way from going down the extremism route, and that will be a thought for the market going into the French elections. Anyway, that's about as deep as I'm going to dip into politics in this post.
So far EURSD is keeping itself above 1.0700 and its got support from interbank and leveraged traders who are looking for the dips to buy.
There's bids down near 1.0700 (small stops), 1.0690, 1.0670/75, 1.0650, 1.0640, 1.0620 & into 1.0600.
Offers are noted at 1.0740, 1.0750, 1.0770, and stronger into 1.0800 & 1.0820/30. It's being touted that new longs will be getting out into 1.0800, should we get there, and possibly even shorting there too. If we do manage to go that high and we see good protection of 1.0800, expect stops to start building just above it.
On the technical front, 1.0680/85 looks to be a minor line in the sand for this rally, which if broken, could see a drop back down to the pre-FOMC levels yesterday.
EURUSD 15m chart
I'm getting the overriding feeling of "what do we do now?" in markets, which we get often after big events like the FOMC. Traders spend months positioning and repositioning for days like yesterday and there's always some hangover after. I want to see what the US does when they jet in in the cold light of day following the Fed, as that's when we should get a better idea of direction.
We've still got the BOE to come at 12.00GMT so there's something for GBP traders to look out for. I still think there's some scope for Carney to take a slightly (heavy emphasis on slightly) more dovish stance after the wage data yesterday.
