EUR/USD is trading around 1% higher on the day
The pair is getting a solid bounce as the dollar is fumbling against the rest of the major currencies bloc - with exception to risk/commodity currencies.
This comes as the Fed cut rates by 100 bps earlier to near zero and relaunched QE. From a technical perspective, buyers also leaned on support from the 100-day MA (red line) and the 61.8 retracement level at 1.1069 and 1.1052 respectively.
The rebound in the pair now brings it back above 1.1200 but buyers are not really in the clear just yet. The key hourly moving averages rest at 1.1232 and 1.1256 so those will be key near-term levels that may limit any upside potential in the pair.
If buyers break above those levels, then the near-term bias will turn more bullish and we could look towards a retest of higher levels.
Although a bit of a wide range - a sign of volatile markets - this is essentially a battle between buyers and sellers in trying to break below the key daily moving averages or break back above the key hourly moving averages.
The euro may be outperforming for now as the market adjusts to the Fed decision but although US 10-year yields are down on the day, they have recovered from 0.62% to 0.79% currently (still down by 17 bps though).
Hence, there may not be as much narrowing in the yields spread as one would think but for now it is enough to keep the dollar lower. But will we eventually see a repeat of last week's price action - rush to cash and the dollar? Only time will tell.
But for now, we can use the technical levels above to define and limit risk and also to judge that bias in EUR/USD.
