Markets were caught off guard by an unexpected Fed rate cut yesterday. The Federal Reserve reduced interest rates by 50 basis points, which triggered a dynamic reaction on USD and stock market. Let's take a look at the current technical situation on the main currency pair EURUSD, German index DE30 and American index US500.
EURUSD
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Create account Try a demo Download mobile app Download mobile appThe US dollar plummeted yesterday after 3:00 pm GMT following an unexpected Fed rate cut. However, the move turned out to be temporary as EURUSD started to pullback after testing the 1.12 handle. The currency pair continues to trade lower on Wednesday. The key support for now is the 1.1090 -1.1110 zone. As long as the price sits above it, the trend is upward. However, a break below may be a trigger for a bigger downard move.
EURUSD H4 interval. Source: xStation5
DE30
The German index, like other stock markets around the world, jumped following yesterday's Fed decision. However, the reaction turned out to be temporary as well The index jumped 200 points in just 5 minutes, but erased the whole move over the next 15 minutes. A rebound attempt can be spotted during today’s session. Looking at the H4 interval, something like an inverse head and shoulders pattern is building up. The yesterday's high at the 12250 pts handle should be considered a key resistance for now and a break higher could help accelerate an upward movement. Nevertheless, it should be remembered that the German index is trading in a downward trend, so 38.2%, 50% and 61.8% retracements should be considered resistance levels to watch. The resistance at 12945 is also confirmed by previous price reactions.
DE30 H4 interval. Source: xStation5
US500
The US500 index, also surged after yesterday's FOMC decision. The first reaction also turned out to be temporary, and the index ended the session with a close to 3% decline. Looking at the chart on H4 interval, one can see that the 3130 points handle should act as key resistance for now as yesterday's high and the 50% Fibonacci retracement of the downward impulse are located there. Nevertheless, the futures market point to a significantly higher opening today. The index managed to stop declines at 2980 points during the Asian session and the level should be viewed as a key support. As long as the price sits above it, there is a chance for another attack on the aforementioned 3030 points handle.
US500 H4 interval. Source: xStation5
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