EUR/USD drops sharply to 1.1860 after FOMC meeting

EUR/USD lost more than a hundred pips after the FOMC meeting. A stronger US dollar across the board pushed the pair to the downside. 

After the 2-day meeting, the Federal Reserve left interest rates unchanged at 1.25%, as widely expected. The FOMC lowered inflation expectations but according to the updated projections, they still expect one more rate hike in 2017. The central bank will start to unwind the balance sheet in October. 

Janet Yellen Speech - Fed Live Stream

FOMC statements: Comparison between July and September

FOMC's decisions regarding monetary policy implementation - Sep 20, 2017

EUR/USD consolidates losses 

The pair tumble from levels on top of 1.2000 to 1.1860, reaching the lowest in six days. The rebound from the lows was short-lived so far and it was moving again toward daily lows amid Yellen’s press conference. 

EUR/USD fell approaching September lows located around 1.1835. At the moment of writing was trading at 1.1875, having the worst day in months. 

“Fresh weakness has formed Head & Shoulders pattern on daily chart and exposed its neckline at 1.1837, with sustained break here, now seen as very likely scenario, expected to generate stronger reversal signal for bearish extension towards daily cloud top at 1.1792 and 17 Aug trough at 1.1662”, said Slobodan Drvenica, from Windsor Brokers Ltd. 

A recovery back above 1.1920 would remove some momentum out of the US dollar. 

The greenback remains supported by bonds. The US 10-year yield reached 2.281%, the highest since August 16.