EUR/USD for Monday, February 4, 2013
In the last couple of weeks, we have seen the Euro push higher strongly however this time the wall of supply at 1.34 was consumed and the likely resistance levels at 1.35 and 1.36 were also quickly consumed. This has resulted in the Euro pushing to trading levels not seen in about 14 months, edging just passed 1.37 in the process. It was only a few weeks ago now that the Euro was placing strong downward pressure on the key 1.33 level which ended up holding up very well and providing a solid base for its recent surge higher. Also during this time, the Euro had been running into a brick wall of supply at 1.34 which was a previous resistance level earlier last year. Throughout a lot of January, the Euro was trading back and forth between these two key levels of 1.33 and 1.34 however it has now broken strongly through 1.34 and continued on very well.
Earlier last year, the Euro met resistance around the 1.35 level and this level surfaced again last week providing reasonable resistance and halting the Euro’s surge higher temporarily. Whilst 1.36 is another round number, there were no obvious recent resistance levels there and the Euro continued right on through on its way to touch 1.37. Should the Euro retrace a little, there is little doubt that both 1.33 and 1.34 will remain key levels. The 1.35 has now entered the situation however it has yet to be called upon as a support level for extended period yet.
Quantitative Easing or QE has been the main driver of exchange rates and it will probably remain this way for some time. The change in the balance sheet values of the ECB and the Fed has had an extreme effect on the value of the ‘single’ currency. More importantly, the Fed and ECB actions over the past week points towards a continuation of this EUR strength.
(Daily chart / 4 hourly chart below)
EUR/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.3450 | 1.3400 | 1.3300 | 1.3700 | — | — |
During the early hours of the Asian trading session on Monday, the Euro has just eased back a little below 1.3650. The 1.33 and 1.34 levels have emerged as key levels over the last month and in the last couple of weeks, the Euro has been receiving strong support from 1.33 which has provided a solid base for its move higher in the last couple of weeks. The 1.35 level was dealt with quickly as was the 1.36 level late last week. There are now several levels likely to offer support over the longer term should the Euro ease off from its present trading levels. Eg. 1.34, 1.33, and 1.3150. Current range: sitting right below 1.3650 around 1.3645.
Further levels in both directions:
• Below: 1.3450, 1.3400, and 1.3300.
• Above: 1.3700.
OANDA’s Open Position Ratios
(Shows the ratio of long vs. short positions held for the EUR/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The EUR/USD ratio has moved very little in the last day or so as the Euro has settled just above the previous resistance level at 1.36. Trader sentiment continues to be strongly biased in favor of short positions.
Economic Releases
- 00:30 AU ANZ Job Ads (Jan)
- 00:30 AU Building approvals (Dec)
- 09:30 EU Sentix Indicator (Feb)
- 09:30 UK CIPS / Markit Construction PMI (Jan)
- 10:00 EU PPI (Dec)
- 15:00 US Factory Orders (Dec)
*All release times are GMT
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
