EUR/USD managed a pop to the 1.3615 level on comments from Janet Yellen that China’s concerns about the dollar are understandable but that while their proposal for a new reserve currency are interesting they are impractical at this time.
US share prices have turned sharply lower, more than 3% off intraday highs, helping cool any relation rally for the EUR.
Bids are eyed in the 1.3560 area near term with more at 1.3520/25.
For medium-term players, the price action is constructive in EUR/USD with a bull flag forming on the charts suggesting the rally will resume soon.
From a seat of the pants perspective, I would have expected the rally to have resumed Monday or Tuesday of this week in sustained fashion given the big stock rally on Monday and the first talk of the Chinese dollar discontent .
As our patented three little rules suggest, when the fundamentals and the technicals diverge, side with the technicals.
