FX Daily: Mixed Market Reaction To FOMC Decision

Today

So today saw the follow up to the initial market reaction to the Fed decision not to taper. In most cases today we have seen some US Dollar strength and recovery following on from the initially aggressive moves.

Strong US Data today helped the US Dollar but we also noted going into the FOMC and last night the extreme levels of the Retail Order books that required a correction before their next major moves and we started to see some of these corrections today although they still have a lot more room should they want to.

EUR/USD

Long: 1.3260

RTAS Order Book systems continued to hold longs but with the Retail Order books at extremes with the majority of Retailers short this pair, we suspect we are not far off a turn in this pair either to find space in the Order Book or to actually reverse. Resistance comes in at the 1.3560 / 13600 level with support around the 1.3430 mark.
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Small rejection of higher prices today but that is more likely due to the Retail Order Book and the pair catching its breath more than anything fundamental. Key if this pair retraces will be the support levels and whether they hold, watch 134.30/50 in particular. We do generally like this pair for a reversal all be it potentially correctional soon and are watching the Order Book for confirmation.
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GBPUSD

Short: 1.5970

RTAS Order Book systems switched to shorts prior to the FOMC statement, although out of the money this pair significantly retraced today and got back below the 1.6050 support/resistance mark. Pus lower caused further Retail Buyers and systems continue to like shorts in this pair, however as we are only just coming off of extremes further Retail Buying will need to continue if this is to significantly reverse otherwise we could see another push higher once the Retail Order Book has been cleared.
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Pair pulled back from the extreme overbought region today, we could see a further correction in the pair given the recent trend it has been on, but whilst we stay above the 1.5780 mark these would still count as correctional and the pair could easily push higher again.
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AUDUSD

Long: 0.9430

Systems switched to longs today but these look like they will be short lived as further Retail Buyers have stepped into the market. Key support comes in around the 0.9380 level.
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0.9700 is the key retracement level to watch for in the AUDUSD and currently we still sit below this key level. With the Fed essentially weakening the US Dollar on lack of Taper the RBA could easily be forced into either further intervention or talking the Aussie lower if they do indeed want a low AUDUSD exchange rate to support their turn around, for the moment though this pair corrected from yesterdays extremes and could correct further lower before we would consider this a change of direction from longs.
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EURAUD

Long: 1.4320

The RTAS Order Book systems remained long this pair on further Retail Selling, however during the day we have seen a rather flat Order Book with even some Buying suggesting that unless this pair pushes higher sooner we could actually see this break lower again. Support comes in at the 1.4200 / 1.4180 level, which the pair tested today, with key resistance at the 1.4470 mark. We suspect the RTAS systems could switch tomorrow if the current price action and Order Book levels continue.
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Pair had formed a nice double top formation with an extremely large RSI divergence. The key support levels offered a nice area for this pair to bounce from oversold RSI levels. If we break the 1.4135 support level we could easily see this pair then move back below the 1.4000 handle, the 1.4470 level now acts as key resistance. Pair has now managed to chop sideways whilst pushing itself out of the oversold territory and has come back off extremes in the Order Book, it is now primed for its next major move higher or lower.
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EURGBP

Short: 0.8430

Order Book systems have chopped around at current levels with an almost perfectly flat Retail Order Book, therefore today the pair switched from longs to shorts today booking some profit as it bounced from lows which it had been threatening to do. The flat Retail Order Book means the pair is likely to switch to longs again tonight on minor Retail Selling but will quickly reverse if the trend changes.
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Pair finally bounced higher off of lows. Support comes in at the 0.8350 level, resistance comes in just above at the 0.8490 level. So far support has held up well after several tests but we suspect the resistance level and 200 day SMA around 0.8500 to put up a strong resistance point for potential moves lower from the correctional bounce. Watch price action around the key resistance level for clues as well as the trend in Retail Order Book.
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