The EURUSD rose in the Asian session on the back of the emergency ECB meeting. The price spiked up and thorugh resistance between 1.0457 and 1.0490. However, as the price approached the falling 100 hour moving average, buyers turned to sellers. The ECB meeting news pushed the price down even further and the pair has now erased all the gains for the day. The lap up and down is for the most part completed with resistance against the 100 hour moving average stalling the rise.
On the downside, the lows from yesterday and today bottom near lows from May 12, and May 16 between 1.0388 and 1.0396 (see blue numbered circles). There is a slightly higher swing level at 1.04189 that was just broken.
Move below those targets, and traders will look toward the swing lows from May which were also the swing lows for the year at 1.0348 to 1.0353, and near the swing low from 2016 at 1.03395.
Move below that 2016 low at 1.03395, and suddenly the EURUSD is trading at the lowest level since December 2002 (near 20 year lows). That will be worth a new headline.
On the topside watch the 1.04189 level as a close barometer in the short term. Move above and traders may start to retarget the 1.04578 level as the ups and downs continue ahead of the Fed decision. Ultimately, if the pair can get above the falling 100 hour MA that would give buyers some added confidence. Keep that in mind through the FOMC decision should the EURUSD rally.
Overall, the US dollar is sharply higher and that hurts international companies the most as it makes remitting earnings expensive and a drag on earnings. Microsoft adjusted their expectations for earnings as a result of the strong dollars impact.
The good news is if the dollar should starts to weaken for some reason (US growth slows and with it inflation and/or a solution to Russia/Ukraine war) the markets will suddenly get a quick tailwind.
So it's could be either feast or famine..
Right now companies are in a famine situation with both the EURUSD and USDJPY both at/near 20 year highs with the Fed expecting to raise rates by 75 basis points followed by another 75 basis points in July and more thereafter. Inflation may have peaked.... again, but that is what was said a month ago. Finally, Russia/Ukraine war is nowhere near an end.. All which is as supportive of the US dollar. However, the price action will tell the story with the technical tools providing the bias and directional clues.