EUR/USD advances to fresh 31-month high above 1.17 on unabated USD sell-off

The EUR/USD caught a fresh buying wave after the FOMC released its statement for the July meeting and took out the 2015 August high of 1.1713 to touch its best level since January of the same year at 1.1740. At the moment, the pair is trading at 1.1725, up 80 pips, or 0.7% on the day.

The pair's upsurge was fueled by the sharp drop seen in the US Dollar Index, which tracks the USD against a basket of six trade-weighted peers. After touching its lowest point since June of 2016 at 93.22, the index started to consolidate its losses and is now at 93.34, losing 0.62% on the day. The thinning volume and short coverings towards the end of the session could be providing temporary support for the index. However, we may see the continuation of today's downfall when the Asian and European traders hit their desks on Thursday. 

• Fed leaves policy unchanged, Sep balance sheet announcement likely - ING

Although today's FOMC statement didn't include any dovish remarks, it didn't provide anything that could help the greenback extend its recovery against its rivals either. The Committee still sees the inflation stabilizing around the 2% target rate over the medium-term and the labor market continuing to strengthen.

• Comparison between July and June FOMC statements

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "...the rally could extend up to the 1.1800 price zone, where the pair has its 200 SMA in the weekly chart, and the top of the daily ascendant channel coming from mid-April with little in the way. A reversal in the ongoing bullish trend has become more unlikely, but intraday downward corrective movements can't be disregarded. Still, the pair will remain bullish even in the case of a decline down to 1.1580."

According to the analyst, resistances for the pair align at 1.1745, 1.1790 and 1.1840 while supports are located at 1.1690, 1.1650 and 1.1615.