EURUSD probes above daily cloud in extension of post-Fed rally; ECB in focus today
The Euro probes above daily cloud top (1.1823) in early Thursday’s trading, in attempts to extend previous day’s strong rally (the biggest one-day gains since Nov 24) after Fed disappointed investors.
The US central bank increased interest rates by quarter point to 1.5% as expected, but left the outlook for 2018 unchanged. Investors had strong expectations for Fed’s more aggressive approach to the monetary policy in 2018 but the central bank opted for the initial decision which includes three rate hikes next year.
The dollar was sold-off after the announcement, boosting its major counterparts.
The EURUSD pair cracked key near-term barrier, provided by cloud top, reinforcing bullish signal generated on daily close above 1.1810/21 (Fibo 38.2% retracement of 1.1961/ 1.1717 downleg / 20SMA).
Fresh bulls show hesitation at cloud top which could result in extended consolidation, before resuming higher as are firmly bullish and daily techs turning into full bullish setup.
Sustained break above daily cloud will be firm bullish signal for extension of recovery leg from 1.1717 towards targets at1.1867/78 (Fibo 61.8% / lower tops of 04/05 Dec), with stronger acceleration to probe above 1.1900.
Double-bottom which formed on daily chart (1.1712/17, 21 Nov / 12 Dec lows) underpins the advance.
Today’s focus turns towards the ECB’s policy meeting. The European central bank is expected to point at improving economic growth but will likely stick to its ultra-low rates and asset-buying program for some more time, in order to lift stubbornly low inflation.
Res: 1.1843; 1.1867; 1.1878; 1.1903
Sup: 1.1823; 1.1810; 1.1797; 1.1773