EUR/USD below 61.8% fibo retracement of Fed rally and testing 100-hr SMA

• EUR/USD has dropped to test the 100-hr SMA located at 1.1438.
• EUR/USD is currently trading at 1.1442, down from a high of 1.1514 and up from a low of 1.1435. 

EUR/USD's rally on the Fed yesterday has run into supply and is testing below the 61.8% Fibo retracement of the move - bearish.

The fundamentals driving the price action relate to, a) following comments from ECB's Weidmann, who said that Germany GDP would probably be "well below" 1.5% this year, and b) the EZ GDP which was softer than prior Y/Y and also showing an unchanged meagre growth rate of 0.2% q/q, as the weakest performance over two quarters since 2013.

 The EUR's near-term prospects are clouded and there is a focus on EZ politics, banking sector and trade. If the Trump administration pivots its trade tantrum from Asia to Europe, then that could be massive and really hurt the euro. 

"In view of concerns that the European parliamentary elections in May could see increased support for populist and potentially Eurosceptic lawmakers, we continue to see risk of some fresh downward pressure on the EUR on a 3 month view,"

analysts at Rabobank argued. 

EUR/USD levels

Analysts at Commerzbank explained that EUR/USD remains underpinned by the 2016-2019 uptrend at 1.1289:

"We have additional support offered by the 1.1267/70 November and December lows. Provided that the market holds here we favour a recovery to the 1.1563 200 day ma and the 1.1623 mid October high and slightly longer term we target 1.1759, the 55 week ma."