EUR/USD was knocked out yesterday as the market digested ECB's reduced QE size by half and simultaneously extended the duration, thus maintaining the same level of stimulus as before. As a result, the pair was on a massive selloff wave, dipping from 1.1836 high to 1.1640 low, 196 pips during only eight hours.
Today, EUR/USD extended losses at 1.1624, the month's fresh lows with expectations for further dips in the coming days seeing the buck strengthening with 94.74 high today.
Fundamentally, the U.S. Index is back with a sharper tone sending a strong message for all currency rivals as the House of Representatives has passed a budget bill paving the way for President Donald Trump's long-waited tax-cut plan. The only question at the moment is who will inherit the U.S. Fed?
Recent Reports has mentioned that the current chair, Janet Yellen, is ruled out, but rumors loom that Trump is worried about a scenario that could disrupt the hardy stock market rally that has taken place since his election. The Dow industrials have surged more than 30 percent from the low just a couple days before the Nov. 8 election.
Last, but not least, Spanish tension with Catalans after the referendum is putting pressure on the euro.
Finally, this week's risk event will be the U.S. GDP release today at 12:30 PM GMT. All eyes will be focused on this, with expectations for a growth during third quarter. The data today will play significantly on the promised U.S. rate hike and DXY levels.
EUR/USD Technical Overview:
Current price: 1.1624
Target: 1.1480?
Closing Price: 1.1652
Trend: Down
Resistance levels: 1.1680, 1.1705 +/- , 1.1763*
Support levels: 1.1540, 1.1480
Trend Reversal: 1.1763*
Down 117.93
Comment: The market triggered a significant downside breakout from sideways congestion of the past month, opening up potential for a bear wave to 1.1480. Trade is poised for continuation selloffs. Any corrections should be rejected up along the lower edges of recent congestion. Only a close over 1.1763* marks a short term turnaround.