There’s no mercy for euro/dollar: another dollar storm that originated in digesting the Jackson Hole news resulted in a Sunday gap. The open gap serves as a bearish sign.
EUR/USD hit 1.32 and fell below this line, to a new 11 month low. The pair hesitated above low support but the bounce from the lows didn’t go anywhere fast.
Here is how the Sunday gap and the “dead cat bounce” look on the chart:
The next support line is 1.3175, and the pair hit a low point of 1.3184 at the lowest. Further support is at 1.31. Resistance awaits at 1.3220, which was the low point of the pair on Friday.
What happened in Jackson Hole? Yellen didn’t offer too much. But as she is usually quite dovish, the lack of extreme dovishness did the job.
On the other side, ECB president also didn’t offer anything new, but the deteriorating situation in the euro-zone means a higher chance of QE.
For more, see the EUR to USD forecast.Get the 5 most predictable currency pairs