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EUR/USD in a Critical Support Breakout

Yesterday, the Fed raised the key interest rate as expected, but also sounded slightly more hawkish because of stronger inflation expectation. The FOMC is telling us that it is anticipating 3 rate hikes in 2017. 

Fed Hikes Rate; 3 Expected in 2017; Inflation Outlook Rises

EUR/USD Daily Chart 12/15

(click to enlarge)

New 52-Week Low:
- After the Fed announced it's latest monetary policy stance, the US Dollar gained across the board. 
- The EUR/USD fell sharply as we can see in the daily chart, where the prevailing market was already bearish.
- The breakout to the downside, to a new 52-week low, is therefore a sign of bearish continuation.
False Breakout Scenario:
- The pivot just before the FOMC event risk is around 1.0670. 
- If somehow the market keeps EUR/USD above 1.04 this week, and pushes it back above 1.0670 next week, we might have to consider this current break a false breakout.
- In this false breakout scenario, we can anticipate a bullish push at least back to the 1.09 area. 

EUR/USD Monthly Chart 

(click to enlarge)

Bearish Continuation Scenario:
- The monthly chart above shows that price is not only at a 52-week low, but the lowest since the very start of 2003. 
- In the bearish continuation scenario, the EUR/USD has downside towards the 0.96 area if the FOMC continues to be hawkish, and if the ECB also continues to be dovish. (This is the currently the case: The ECB lowered monthly bond purchases but extended the anticipated deadline, which effectively will create a larger total amount of bond buying)
- Now, before looking at the 0.96 pivot, we might want to consider a pivot around 1.01, and also the 1.00 (parity) level, which could be a psychological support level as well.