EURUSD Major Correction (Oct 9, 2014)

The pair got a boost from a dovish FOMC minutes, which indicated that the Fed isn’t likely to hike interest rates early next year.

A pullback could take EURUSD up to the previous support zone around the 1.2800 levels, as stochastic is just starting to make its way out of the oversold zone. This signals that buying momentum is in play and that a larger correction might be in the works.

A break above the 1.2800 mark could lead to a bigger retracement to the 1.3000 major psychological mark, which might also hold as resistance and keep the pair in a downtrend. MACD is hinting at a pickup in buying momentum as well.

If the selloff resumes, EURUSD could make its way back down to the former lows at 1.2500 or perhaps make new ones. After all, the trend remains strong and the path of least resistance for this pair is to the downside, as fundamentals favor a short euro bias.

By Kate Curtis from Trader's Way