The Federal Reserve did not disappoint those who were waiting for hawkish stance and firmer signals about central bank’s next steps in coming few months.
As conclusion of FOMC’s September meeting, US policymakers announced they left interest rates unchanged at 1.25%, as widely expected outcome, but signalled one more rate hike towards the end of the year and three more hikes in 2018.
Fed also announced the beginning of reduction of its massive portfolio as from October.
Hawkish signals from Fed put the dollar under increased pressure, in rather expected action in such scenario.
The Euro spiked to the session high at 1.2033 in a nervous pre-announcement trading, but quickly lost ground after FOMC delivered their verdict.
The EURUSD pair slipped below 1.1900 in initial sell-off, which retraced over 61.8% of 1.1837/1.2033 recovery leg and turned near-term bias with bears.
Further extension lower dented another important support at 1.1877 (daily Tenkan-sen) loss of which would generate further bearish signal.
Fresh weakness has formed Head & Shoulders pattern on daily chart and exposed its neckline at 1.1837, with sustained break here, now seen as very likely scenario, expected to generate stronger reversal signal for bearish extension towards daily cloud top at 1.1792 and 17 Aug trough at 1.1662.
Res: 1.1877; 1.1915; 1.1964; 1.2000
Sup: 1.1837; 1.1792; 1.1740; 1.1662