EUR/USD bounced back after a test of its key daily moving averages
The ECB disappointed the market with its measures yesterday and as chaos ensued in the equities space, the market fled towards the dollar - that's when you know things are bad - without really looking back.
That sent EUR/USD lower from 1.1300 in the initial post-ECB reaction to a low of 1.1056 before recovering back above 1.1100 as seen currently.
The near-term bias in the pair remains more bearish (200-hour moving average only seen at 1.1260) and with the market shifting back towards panic and this time rushing into the dollar, this could be just the start of a push lower in EUR/USD.
As such, with the market as volatile as ever, keep an eye on the 100 and 200-day MAs (red and blue lines respectively) @ 1.1068 and 1.1100 respectively for today.
The reaction in the market today is less chaotic as we see a retracement in the drop in equities over the past two days. 15-20% drops are no joke and certainly warrants some correction at the very least. Remember, the market never moves in a straight line.
But looking forward, keep an eye on how the market is going to keep reacting as the meltdown continues. A rush out of emerging markets and major panic could see the greenback gather more momentum like we saw yesterday.
And a break under the key daily moving averages will open up more potential downside for EUR/USD. As for any upside retracements, look towards the key hourly moving averages at 1.1260 and 1.1311 for the time being.
