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Drop in EUR/USD realized volatility suggests FOMC countdown is on

Realized volatility as measured by 10 day ATR (Average True Range) has fallen sharply in EUR/USD pair suggesting with all other high risk events such as European Central Bank's  rate decision (ECB) and NFP report out of the way, focus has now turned on to FOMC next week, which would define further path for the pair.

  • EUR/USD's 10 day average of daily movement has fallen since post NFP report from 180 pips to just about 111 pips as of today. Markets awaiting burst in volatility.

Until recent financial turmoil, after China moved to weaken Yuan most of the analysts and market participants had their focus on September for rate hike, which has now moved to December.

Though market is expecting a rate hike now in December, probabilities are high that FED might move as early as next week.

Euro has broken key trend line and now hovering just below that, so naturally bias is on the downside ahead of FOMC, however nothing can be ruled out as FOMC can turn out to be trend changing event.

Euro is currently trading at 1.115 against Dollar, resistance lies around 1.122 and 1.133 area, while support is around 1.10 and 1.08.

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