Overbought conditions and profit-taking push the pair lower ahead of Fed policy meeting
The pair drops to 109 support zone on Monday, pulling back after bulls failed to close above 100WMA (109.63) on Friday, with daily action being capped by 200WMA (109.85).
Overbought daily studies and profit-taking after last week’s 1.8% advance, were among main drivers of today’s easing, with bull-trap pattern forming on daily chart and adding to negative signals.
Fresh weakness cracked initial Fibo support at 108.93 (23.6% of 105.98/109.85) and could test key support at 108.37 (Fibo 38.2% / 200DMA) on stronger bearish acceleration.
Pullback so far looks like positioning for fresh push higher but needs to hold above 108.37 to keep dip-buying strategy in play.
Daily stochastic is about to emerge from overbought zone and bullish momentum is fading that points to the risk of deeper pullback, which could be expected if 108.37 pivot gives way.
Traders await Fed’s decision after the end of two-day policy meeting on Wednesday, with the central bank expected to remain cautious despite surprise positive results from labor sector, but at least talk of negative interest rates would be sidelined this time.
Res: 109.59; 109.89; 110.00; 110.36
Sup: 108.82; 108.60; 108.37; 107.91