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EUR/USD Breaks 1.0500 as Fed Connects the Dots.

EUR/USD finally cracks 1.0500 as the Federal Reserve puts more dots in its plots then expected.

EUR/USD and 1.0500 seem to be a bit like the Fed’s rate hike last night. A TV programmes season finale that has just dragged on far too long. This morning in Asia though the series finale finally came to an end with Euro breaking 1.0500 triggering some messy price action as options strikes and stop losses were finally taken out. EUR/USD has been flirting with 1.0500 a number of times since April 2015. Almost as long it seems as it hasn’t taken MS Yellen and Co’ to stop waiting and seeing and assimilate more”data.”

Overnight we had the briefest of touches at 1.0495 before early Asia finally swung the bat and this saw EUR/USD drop to 1.0465. Perhaps more strangely EUR didn’t loiter there at all. After touching the lows we saw a just as rapid short squeeze take us back to 1.0520 before we settled around 1.0500/10.

Talking to a few contacts on the wholesale treasury side, it looks as if after the initial options cull and stop loss run they saw a lot of real money buying from corporates and investment funds doing year-end rebalancing before the holiday season sets in with a vengeance next week. These flows will make themselves felt in a variety of currencies in the next two days and should be regarded as transitory in their effects.

The low of  1.0465 was just shy of March 2015’s 1.0460 low.  These two levels are initial support with last night’s high of 1.0667 first resistance on the daily chart.

EURODaily [1]


Looking at the big picture, a weekly close below the  1.0460/65 level opens up a move to the 1.0100 area on a technical basis. Last seen way back at the end of  2002. Interesting times indeed!

EuroWeekly [2]

EUR/USD Weekly


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley [6]

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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