The US dollar moved sharply higher following the FOMC decision, sending EURUSD and GBPUSD lower while lifting USDJPY and USDCAD. Each pair has now reached an important technical decision area. In the video above, I outline the levels that buyers and sellers must break to take greater control.
The US dollar moved sharply higher following the FOMC decision, but the move has now reached the next important technical test across several major currency pairs.
EURUSD and GBPUSD moved lower, while USDJPY and USDCAD advanced. The direction is clear, but traders should not assume the initial move will continue indefinitely. Each pair is now trading near a level or zone that will help determine whether dollar buyers retain control.
EURUSD tests a key support area
EURUSD moved sharply lower and is testing an important support area between 1.1471 and 1.1482.
That zone includes:
- The 61.8% retracement at 1.14719
- A swing area between 1.14715 and 1.14821
This is a key decision area for buyers and sellers.
Buyers can lean against the zone, but they need to push the price back above the 1.1499 to 1.1511 swing area. The 50% retracement at 1.15175 would be the next target above that zone.
If EURUSD moves below 1.1471 and stays below, sellers would take more control. The next downside targets would come near 1.14492, followed by 1.14352.
For now, the sellers have the stronger short-term bias, but the support zone is giving buyers a place where risk can be defined and limited.
USDJPY holds above its breakout area
USDJPY moved higher and broke above the swing area between 155.04 and 155.21. The pair is also trading above the 38.2% retracement at 155.748.
That gives buyers the short-term advantage, but staying above 155.748 is now important.
If buyers can hold above that retracement, the next upside target is the four-hour 100-bar moving average near 156.565.
If the price falls back below 155.748, the 155.04 to 155.21 area becomes the key risk zone. A move back below that area would weaken the bullish breakout and give sellers more confidence.
Buyers are taking more control, but they still need to prove they can stay above the broken levels.
GBPUSD sellers take more control
GBPUSD moved below its 100-day and 200-day moving averages, shifting the technical bias more firmly to the downside.
The important resistance levels are now:
- 100-day moving average: 1.34407
- 200-day moving average: 1.34557
- 38.2% retracement: 1.34704
It would take a move back above that cluster to give buyers greater control.
On the downside, the price is testing a swing area between 1.33947 and 1.34161. The price has moved below that zone, increasing the downside focus toward the 61.8% retracement at 1.33445 and the lower swing area between 1.33210 and 1.33407.
Sellers are in control below the daily moving averages. Buyers would need to reclaim those levels to change the technical story.
USDCAD stalls ahead of 1.4000
USDCAD moved higher after the FOMC but stalled near a confluence area around 1.3990 to 1.4000.
That resistance includes:
- A swing level at 1.39901
- The 50% retracement at 1.39915
- The natural resistance at 1.4000
The combination makes this a more important ceiling.
Buyers need to get above 1.4000 and stay above it to confirm the next bullish leg. A successful break would shift the focus toward 1.40557.
On the downside, the initial risk area is between 1.39480 and 1.39663. Below that area, the 100-day moving average at 1.39308 would become the next target.
The USDCAD remains supported, but buyers have more work to do. The 1.3990 to 1.4000 area is the technical hurdle that must be cleared.
Trading education: The initial move is only the first clue
In my book Attacking Currency Trends, I emphasize that moving through a level is only the first step. Staying beyond that level confirms that buyers or sellers are retaining control.
That lesson is especially important after a major event such as an FOMC decision. Price can move quickly through several levels as liquidity shifts and positions are adjusted. The better technical clue often comes from what happens after the initial volatility settles.
A level is a line. A zone is a battle.
If price moves through a technical area and stays through it, that supports continuation. If the price quickly returns through the area, the failed break can signal rejection and a potential reversal.
The technical roadmap
The dollar has the short-term momentum, but the next move will depend on confirmation:
- EURUSD: A sustained move below 1.1471 strengthens the bearish bias. A recovery above 1.1511 would give buyers some breathing room.
- USDJPY: Holding above 155.748 keeps buyers in control. A move back below 155.04 would weaken the breakout.
- GBPUSD: Sellers remain in control below 1.34407 to 1.34704. The next downside focus is 1.33445.
- USDCAD: Buyers need to break and stay above 1.4000. A move below 1.39480 would weaken the bullish push.
The post-FOMC move favored the dollar. Now the price action at these technical levels will provide the next clue.
This article was written by Greg Michalowski at investinglive.com.