The FOMC on Wednesday caught the market by surprise and prices need to adjust quickly to new expectations for a June 15th rate rise.
The eur/usd broke its 1.12 key level yesterday, but received support right after, another attempt today to cross below 1.12 can prove to be more successful.
The markets did not expect a rate rise in June and the odds for that happening, based on market expectations, jumped from 4% to 30%!
That means volatility could return quickly as market participants try to readjust their trading portfolio.
The volatility index also called the fear Index or simply the VIX, is on a crucial level of 16.33 points.
A breakout above 17 should confirm high volatility and the next upside target for the index could be around 20 points.
The correlation between the VIX and U.S markets such as: Dow and S&P, is negative, meaning when the VIX rises usually markets drop.