Interesting movements were displayed by the main currencies on Thursday yesterday with the focus on the results of the central bank meeting in the spotlight and there were surprises in the European session.
The US dollar strengthened immediately following the results of the FOMC meeting early Thursday morning yesterday, which saw interest rates raised by another 75 basis points by the Federal Reserve (Fed) for the third time in a row.
However, after the strengthening momentum somewhat subsided in the continued trading in the Asian session, the US dollar was again traded lower following the surprise of the Japanese government to intervene directly in the financial market a few hours after the central bank of Japan (BOJ) maintained interest rates and loose policy.
Japan's unusual move is aimed at controlling the worse fall of the Yen against the US dollar which has shrunk to its lowest level since 1998, and has caused the US dollar to weaken in the European session, but recovered again in the New York session.
On the price chart of the EUR/USD currency pair yesterday, we saw that the price drop has continued to the 0.98000 support zone after the strengthening of the US dollar following the increase in interest rates by the Fed.
However, after moving rather slowly in the Asian session, there was a price rebound due to the decline of the US dollar, the effect of Japan's intervention in the market.
The price rose again around 100 pips with the resistance level of 0.98800 at the SBR (support become resistance) zone being tested, but the price failed to continue to rise higher beyond the zone.
The re-decline in price was exhibited in continued trading in the New York session, seeing that the price is still moving in a bearish trend where the Moving Average 50 (MA50) barrier on the 1-hour time frame on the EUR/USD chart has not been successfully breached by the price.
If the price still manages to continue the decline lower at the close of trading this week, it is possible that the support zone at 0.98000 can be broken for the price to record the latest 20-year low.
For further declines, price could be seen reaching up to around 0.97000.
However, if the price bounce occurs again, the resistance at 0.98800 will continue to be the focus for price testing.
If it is successfully broken and also rises past the MA50 barrier which signals a trend change, the target will return to the 1.0000 parity zone again.
