The pair is down on the day still, but bounced nicely off a key support target
The EURUSD continued the fall in trading overnight and into the early hours of the London morning session. The low reached the lows from back on April 30 and May 5th. Those lows came in at 1.1070 and 1.1065 respectively. The low today came in at 1.10614. Traders could not resist the key support target being reached, and started the corrective move higher.
The rebound has the price back up testing the close from yesterday's trading at 1.1148. The price has just moved above the lows from yesterday at the 1.1118 and the low floor area going back to May 11 and May 12 at 1.1130. This will now be close support. The 100 day MA comes in today at 1.11649 (overlayed blue horizontal line in the chart above). This will be a key "line in the sand" for traders today. Yesterday, the price moved back below this level. Earlier this month the pair moved above the MA only to have the price retreat back below 2-days later. That dip only lasted 2-days before shorts once again were forced to cover after weaker US data. Will the pair repeat the process? That will be the test today.
The EURUSD tumbled about 3.5% since the rise on Friday to the low today. As shown the low today was a pretty visible support target that held. It is Wednesday - the midpoint of the week. The week started at the highs and moved straight down. With the FOMC meeting minutes as the only release for the day (at 2 PM ET) and the statement thought to be more dovish when released on April 29th, the rally back higher is not surprising. For your guide, the price of the EURUSD just before the release of the April 29 statement was at 1.1149. The pair may/should (?) keep below the 100 day MA before meeting release. I would expect support in the 1.1118-30 area (that is my guess). The moves after the release will test the markets will to be more bullish or more bearish. Look for the break and momentum after that time.
PS Keep in mind, Vice Chair FIscher speaks tomorrow and Yellen speaks on Friday. Draghi speaks tomorrow as well. So more fireworks to come to help determine the fate of this currency pair.
