A tight turn for the EURUSD on the Fed.
The morning of the exam.
On Wednesday, everyone was waiting for the main event of the week, which is the Fed press. The expectations were fully justified, and caused a sharp turn in the EUR / USD pair.
What did the Fed decide? The rate on the dollar will be raised in December by + 0.25%, which is already planned. However, the three increases have been supported for the + 0.25% (that is, an amount of + 0.75%) in 2018.
More importantly, the Fed will begin a long campaign to reduce the balance of the assets in removing excess liquidity from the market (QE versa) in October.
It is without doubt the tightening of the Fed’s monetary policy, which is particularly in contrast to the continuation of the recovery in the markets of the ECB.
Thus, the shift of the EUR / USD pair is quite in line with the basic understanding of the «fundamental analysis» on the interest rate differentials. (This can not be said for the last 6 months, the trend of the euro).
Consequently, the euro moved upwards to 1.2031 and sharply fell to the bottom with a breakout over the psychological level. The minimum for the week was 1.1910 and closed the day below.
What do we expect?
The resumption of the down trend is expected and the sale is continued. However, if the attempt of the market to breakdown, yesterday, low-1.1860 failed, the price can move more and more towards 1.1825 and 1.1835. Also, the retreat will offer opportunities of sale.
In the case of a breakthrough in the levels of 1.1825 and 1.1835, this could trigger the formation of a «triple top» figure type, with the target up to 1.1600 on the chart H4.
The euro is also under pressure due to the approaching elections in Germany on the Sunday following, the 24th of September.