EURUSD - Rethink after yesterday's surprise cut

Yesterdays surprise rate cut from the ECB to a record 0.25% caught a fair few out, shown with a viscous sell off immediately after the announcement, but did it manage to recover later in the day to settle back above the 1.3400 mark.

We have convincingly broken out of the trend channel but now seeing some support from the 100day SMA and 38.2% Fibb retracement level / previous high at 1.3420 level.  Given the combination of these, this could prove to be a strong support so needs to be watched closely.



The technical indicators are confirming the move south as the MACD < 0 and heading in a downward projection.  We may see an attempt to take the EURUSD back up if the bulls manage to try to gain control back, but I would imagine this will be short lived, before we attack the 1.3420 level again.  Upside resistances to look out for are 1.3470 and 1.3520.  Downside supports to bear in mind are 1.3300, 1.3170 and 1.3100.

The bears cannot get overly excited and I must air a word of caution by this price action on the daily chart, because taking a step back and looking at the weekly chart we are still in a very long forming symmetrical triangle chart pattern so will need to break the next support level at 1.3000 to really excited!

Charts sourced from ig.com