For the first time in six months the EUR/USD has broken below the $1.40 level. This was on Jan 27 and both the Asia and London trading sessions pushed the euro dollar to it’s low of $1.3930.
During the New York session the FOMC meeting minutes with the Fed changing the language:
The FOMC removed a sentence from its statement that has been in place since April 2009. The statement that the economy is “likely to remain weak for a time,” was changed to “the pace of economic recovery is likely to be moderate for some time.”
The statement noted the U.S. economy has continued to “strengthen,” which is more upbeat than the December statement.
The markets turned after a “knee jerk whipy type reaction” and by the opening of the Asian/Australia sessions had traded all the way back to $1.4027 which is a Japanese candlestick hammer formation which is known to be a reversal signal. With the market turning quickly after the Fomc meeting minutes the move looked convincing. From the start of the Asian open until the close of New York on Friday heavy selling has brought price down to $1.3863.
The continued EUR/USD strength is not the move predicted to come from the eur usd long term forecast but has flipped everyone’s sentiment to everyone all of a sudden bullish the US dollar. Thankfully this nice move was the highest earning pair for January but there is a high probability it reverses with extreme USD weakness causing new all time highs against the EUR before the dollar strength predicted in the forecast takes place.
Looks like there could be at least another couple to a few hundred pips to the downside but traders be ready to pounce on all buying for the beginning of the coming reversal.
“Click the link below to let me help you figure out what you should read and do first…”
