A decision of the Fed to start reducing the size of its $4.5 trillion asset portfolio caused a very high volatility in the markets, which resulted in 123 points appreciation of the Dollar against the Euro just in one hour. From technical perspective, this event signified a breakout of the pair from a rising wedge. Although the fall was sharp, it was stopped by a combined support formed by the monthly PP at 1.1881 together with the bottom trend-line of a dominant ascending channel. On the one hand, today the buck might make another attempt to break to the bottom, using the downside momentum from the yesterday’s event. On the other hand, on a daily chart it looks like the rate formed a third reaction low yesterday and, for this reason, has to make a fully-fledged rebound.
