EURO/USD---Why does it go bearish after FOMC meeting ??

FOMC   and  FED  decided  to buy more treasuries and  reinvest principle payments on mortgage assets and maturing debts have resulted in the High demand for dollars, IMMEDIATE dropping of  equity( S & P 500/ FTSE) , upsurging in gold , strengthened Dollars and  YEN,  accompanied by selling off  of  Commodity Currencies( AUD/U,  NZD/U, U/CAD, AUD/J, CAD/J, AUD/J, NZD/J) due to the concern on slowing China Economy,( CHINA  July Industrial production slowed to 13.4% y/y from 13.7%, retail sales slowed to 17.9% y/y from 18.3%, CPI rose to 3.3% from 2.9% mainly on flood and weather impact)


Despite the lowered growth prospects for the US, it is again gaining safe haven status. Yields on today's auction of $24B 10 year Treasury notes was down to 2.71%, the lowest since early 2009, as money seeks safety in the Treasury coffers.


The strength of both Dollars and YEN  benefited after the further downgrading of US economy by  Feds   herself  with further signs of a slowing China Economy( Which is of severe impact) weighed significantly on the risk trade ,, as Investors are now considering the two (Yen and Dollars) are the  safe heavens  as the equity markets sunk below its three months low.


This is another typical example on CARRY TRADE UNWINDING.




Further Analysis on Euros/Usd



Daily Chart E/U

Weekly Chart E/U

On the Daily chart,  the breaking of support at 1.2732 (support 2) shall expose 1.2600 , near the 50% Fibo retr and also close to the Ichimoku top cloud support  which is considered a very critical supporting level. The entire bearish reversal is confirmed upon breaching this 1.2600 level.


However, successful lifting of the pair at 1.3040 on daily chart (near both Tenkan-sen and kijun line resistance on daily chart )  will resume its upward bullish reversal action.


All H4, Daily, and Weekly Charts show extreme bearish in the next few trading sessions.


In short, Euro/Usd must hold above 1.2732 to prevent severe damage below the 1.2500 level