The EURUSD is coming off hard following Wednesday’s relatively hawkish FOMC.
The euro is plunging below the 1.2000 level today, so we’ll have to wait and see where it closes at 5 pm EST.
A weekly close below 1.2000 would likely flip the level to resistance.
The USD index (DXY) is also coming off key weekly support.
Another scenario I’m keeping a close eye on is the potential bearish reversal pattern since last August.
I saw it a few weeks ago, but I felt it was premature to discuss it then.
There’s a chance the price action since August 2020 is a head and shoulders pattern.
The left shoulder is a bit low and the right is slightly high, but it still qualifies as one.
However, the key will be what happens in the 1.1770 support area.
A close below that would confirm the pattern and open up downside targets, including 1.1500.
On the other hand, a break above the recent high at 1.2260 would negate the idea.
If this is a head and shoulders, the measured objective could take the EURUSD down to the 1.1000 region.
Will that happen?
Nobody knows. With the way the pair is reversing this week, though, I wouldn’t rule it out.