EUR/USD: Strong Buy-Side Momentum, Resort To Intraday Levels

The surprisingly dovish FOMC has sent shockwaves which makes the market go through a period of macro re-evaluation towards the US Dollar. Real and fast money are likely to keep jumping onto the USD bear bandwagon, which means potential shallow pullbacks at intraday decision points for a further extension of the strong bullish momentum. The close at the highs of the day, with the volume profile forming a double distribution up strengthens the chances of a continuation higher. Besides, the fair valuation in the exchange rate based on the major narrowing of the German vs US bond yield spread (10y) is congruent with the spike in prices, further supporting the notion of buy on dips. In terms of market structure, the upthrust bar post FOMC has set into motion what looks to be the potential beginnings of a fresh bullish cycle judging by the magnitude and speed of the move. It’s worth noting, even if the majority of the vol may be concentrated in the GBP, that the EU-Brexit Summit get underway today, which becomes a sources of spontaneous vol events intraday on a headline by headline basis. The fact that the Euro was bought up to the boots even as the GBP fell sharply on Wed, is a positive sign, as it reflects less dependency on Brexit headlines.