The positive trend continues for EUR/USD ahead of the release of the US FOMC meeting minutes. After breaking above the first downtrend resistance line yesterday, the pair is now trading above the second line.
However, the pair lacked the necessary momentum to break above a more veteran resistance line, so the move may still turn out to be a false break.
Update: FOMC Meeting Minutes give USD another blow on calm message
Here is the daily chart, showing break of the longer resistance line.
The initial 2013 peak of 1.3830 was broken only late in the year and it served as a separator of ranges in various occasions throughout 2014. In Yellen’s first decision, the pair initially found support at this line before suffering a bigger downfall.
Yellen then released a hint about rate hikes: that they could come 6 months after QE comes to an end: around April 2015 according to market calculations.
Now we get the minutes from that decision, and these could provide further hints. If the Fed is cautious about the economy and sees a rate hike only in the distant future, we may see a follow through of the move and a break towards the next levels: 1.3894 and even 1.3964.
A hawkish Fed, that is getting ready for hiking the Federal Funds Rate, could make this a false break and the pair could challenge lower levels such as 1.38 and 1.3740.
For more levels, events and analysis, see the EURUSD forecast.
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