The EUR/USD pair had a rough session on Wednesday as the market initially trying to rally in the early hours, but was turned around and sliced through the 50 day moving average. The 50 day EMA is quite often used by traders to determine short-term momentum in a market based upon the longer-term attitude. The candle slicing through it of course will have caught some people attention, but it is currently sitting on top of the 1.3250 support level, which in my estimation is a bit more important.
However, the Federal Reserve and the minutes of the last FMOC meeting would have been the bigger story for the day. After all, the markets have enjoyed cheap money out of the Fed for the last several years, and the fact that the committee had suggested that possibly an adjustment of the amount of asset purchases by the Federal Reserve would be prudent, this of course caught a lot of traders off guard. However, the real question is whether or not it was a knee-jerk reaction that will be reversed.
1.3250
I feel this general vicinity is significant support, and as a result I am currently watching this market and not involved in either direction. I believe that we could see a bit of a bounce from here, but if this area does give way, we will find the 1.30 level in short order for what I can tell. Within this chart, this is one that foretells a "risk off" type of marketplace.
I do think that the 1.30 level will hold in the end. If that level were to give way, we would have a serious rout on our hands, which is not something that I expect to see. Although the ECB recently suggested that the value of the Euro was a bit too high, in reality they are nowhere near getting involved in some type of strategy to weaken it. The Federal Reserve is already well ahead of the Europeans, and the statement during the minutes did not suggest a particular time frame, only a desire to remain flexible.