After failing to breach the middle bollinger band, bearish momentum took over and sent the EUR/USD towards 1.08 as forecasted. The support region held and the currency pair had since eased back to 1.086.

Should the bearish correction manage to push beyond 1.08, we may expect extended bearish targets at 1.06 and 1.05. Bullish return will see the EUR/USD head towards 1.1 again for a retest of the resistance region.

Fundamental Analysis

With the US Federal Reserve interest rate hike behind us now, the markets may start to exert influence on a new momentum. It is important to note that with any interest rate increase, immediate sentiments are likely to favor the US dollar for now. The interest rate hike puts the US monetary policy in a tightening mode whereas central banks in Europe and Asia Pacific are mostly still easing.

The S&P 500 has fallen and is now close to the 2000 points support. An increase in interest rate translates into higher costs of funds. This likely dampened the equities market. It is also crucial to be aware that the strong US dollar is likely to reduce the competitiveness of US companies doing export. This may have a negative impact on the US economy.

With the low volume market condition persisting, do be very careful with your trading. Always practice proper money management.