EUR/USD corrective downside tests 1.1700

EUR/USD is posting moderate losses today after clinching fresh 30-months tops near 1.1780 earlier in the Asian session, currently putting the 1.1700 key support to the test.

EUR/USD stays bullish, potential pullback stays on the cards

The pair has come down from the 1.1780 area today, or 30-month tops, as market participants continue to digest yesterday’s FOMC meeting.

It is worth mentioning that the Federal Reserve left unchanged its Fed Funds target range at 1.00%-1.25%, broadly in line with prior surveys. The statement, however, sounded downbeat as the Committee now sees inflation running ‘below 2%’ instead of the previous ‘somewhat below 2%’.

The Fed’s tone poured (more) cold water over expectations of further tightening in the next months, with the probability of a third rate hike in December now at just below 47%, while investors do not see the Fed raising rates at the September 20 meeting, all according to CME Group’s FedWatch tool and based on Fed Funds futures prices.

The likeliness of a correction lower in the market stays underpinned by the current overbought level in spot and the activity in futures markets and options markets.

Later in the NA session, US initial claims is next on tap seconded by June’s durable goods orders and trade balance figures.

EUR/USD levels to watch

At the moment, the pair is losing 0.24% at 1.1707 and a breach of 1.1608 (10-day sma) would target 1.1501 (21-day sma) and finally 1.1477 (low Jul.20). On the upside, the next up barrier is located at 1.1777 (2017 high Jul.27) seconded by 1.1800 (psychological level) and then 1.1900 (psychological level).

Furthermore, the daily RSI (14) shows the pair is in overbought territory at 71, while the MACD stays well into the bullish camp.