ICmarkets
Short

Biased to the downside...

FX:EURUSD   Euro / U.S. Dollar
The US Federal Reserve kept interest rates unchanged on Wednesday, as expected. The Fed, which hiked interest rates three times last year, mentioned the economy warranted ‘further gradual’ increases in rates. The target range for the federal funds rate currently is 1.25%-1.50%.

The impact of the Fed’s decision/statement was somewhat muted on the charts. The euro             is seen hovering a few pips ahead of the 1.24 handle seen on the H4 timeframe after fading session highs of 1.2474, and the US dollar index             continues to cling to 89.00.

Weekly movement remains confined within the walls of a weekly supply zone printed at 1.2569-1.2287. This zone also highlights a weekly Fibonacci cluster (green lines):

• 61.8% Fib resistance at 1.2604 taken from the high 1.3993.
• 50.0% Fib resistance at 1.2644 taken from the high 1.4940.
• 38.2% Fib resistance at 1.2519 taken from the high 1.6038.

Daily flow, on the other hand, is seen encased between a daily Quasimodo resistance level at 1.2495 and a daily support level coming in at 1.2359. Should weekly sellers push the unit lower, the next downside target seen beyond 1.2359 is a support area formed at 1.2246-1.2164.

Market direction:

To confirm bearish intent from the aforementioned weekly supply, a daily close beneath the current daily support level is vital, in our opinion. This would likely see the H4 candles engulf a H4 trendline support extended from the low 1.2165, and open up the possibility for an approach down to the 1.23 handle (seen nearby is a H4 Fib cluster comprised of a 61.8% Fib support at 1.2307 and a 38.2% Fib support at 1.2302).

On account of the above, intraday shorts could be an option beneath the H4 trendline , targeting 1.23 as an initial take-profit zone.

Data points to consider: US unemployment claims at 1.30pm; US ISM manufacturing PMI at 3pm GMT             .
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