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Euro Rolling Over Again Following Fed Rate Hike


On December 16 the US Federal Reserve raised rates to 0.5%, from 0.25%. The move had long been anticipated. While there was volatility at news time, the overall reaction was fairly muted with Euro futures (6E) having a normal day in terms of average volatility. The Euro closed down only 0.17% following the announcement.

December 17 is seeing a bit more selling though. Euro futures are down more than 1.4% as the New York lunch hour approaches, and the daily chart is showing signs that the price could continue its descent. The longer-term trend remains down, and after a brief pullback in early December short-term (downward) momentum in recent days looks to be re-aligning with the long-term downtrend.

Figure 1. Euro Futures (March, 2016) Daily Chart

With the trend and momentum both running to the downside, the next downside target is the 1.06 region. That's just above the low of 1.0540. If the price continues to drop below that, 1.04 and 1.03 could stall the selling.

On the flip side, a rally back above the December 15 intraday high of 1.1088 indicates the price is still moving within a range and could advance into the 1.14 to 1.16 resistance area.

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