The EURUSD got a boost last week largely on the back of dollar weakness. There were positives from Europe in the form of the German constitutional approval but the Fed’s aggressive QE3 was the main catalyst for the EURUSD move higher.
From a technical perspective, the price moved up to the 38.2% of the move down from the 2011 high. That level comes in at 1.31482. The high from Friday peaked at 1.31675 before falling off. In the NY session, the price has taken out last weeks high (reached 1.30709) and has currently moved back below the 1.3148 level (see hourly chart). Note how the price – although able to breach the key resistance at 1.3148 – has not been able to close above the level. Get an hourly close above the 1.3148, however, and the sellers may once again be forced to cover.
The bulls remain in control in this market. Sellers today were only able to take the price to a corrective low from Friday’s move higher. In the process, the price did move below a channel boundary, but that was quickly reversed. If in today’s trading the price can staybelow the 1.3148 level that might be step 1 for further correction. Next would be a move below the 1.3120 and then 1.3108 level (see hourly chart). If these steps can be taken, the profit taking may begin in more earnest (with the low for the day the next target). However, until those steps are taken, the bulls remain in control.
Trends are fast, directional and have a large trading range. The trend move for the month has taken the price up nicely. The range for the month is 670 pips so far. That is the 2nd largest range for 2012 (in May the range was 947 pips). Last September, the low to high range extended to over 1000 pips. Is there enough momentum to get extend the range to the 1000 pip level? The technicals will give the clues. A curious FYI is the key 1.3486-90 level would give September a 994 pips trading range for the month. Just a thought. Watch the 1.3148 level today and the 1.3108-20 below for the the bullish/bearish bias today.
