EUR/USD Temporarily Bouncing Off 1.1100

EUR/USD (1-hour chart as of February 28, 2015) has continued the strong downside momentum dipping into a low of 1.1100 on January 25. Current price is still trading below its hourly EMA-200 (bold green moving average line on chart), which has been acting as medium-term resistance since mid-December 2014.

On January 21, the pair tested the hourly EMA-200 for the first attempt (red arrow on chart). Note that the hourly EMA-100 (blue moving average on chart) is turning flat. Price has been forming a cluster around this flat moving average line. If the pair can hold the hourly EMA-100, it could test the EMA-200 again.

Note also that the last significant high point of the recent downtrend is located around 1.1290 (bold red horizontal line on chart). Watch closely the price action against this important short-term support level. A breach of this support could add more bearish pressure on this pair.

The ECB announced an expanded asset purchasing program of up to 60 billion euros a month to boost economy and fight deflation, while the FOMC said today in its statement that the “economic activity has been expanding at a solid pace.” The FED stays patient on raising interest rates amid strong job gains and low inflation.

Support levels below:

1st support: 1.1290 (last significant high point)

2nd support: 1.1220 (January 27 low)

3rd support: 1.1100 (January 25 low)

Resistance levels above:

1st resistance: hourly EMA-100

2nd resistance: hourly EMA-200

3rd resistance: 1.1460 (January 16 low)