With the Eurozone apparently having consigned the recent crisis in Cyprus to the ‘old news’ drawer in the filing cabinet, the Euro is picking up a bullish tone once again today, currently trading just below the 1.3000 level, and recovering the losses of earlier in the week, which saw the EUR/USD slide to a low of 1.2842 on Tuesday. The price action on Wednesday, which saw the pair bounce back, duly posted an isolated pivot low at this level, helping to give some much needed bullish momentum in trading today, and helped higher with some interim weakness in the US dollar. Indeed the US dollar index appears to have run into some significant resistance in the 83.18 area, and in today’s trading session has moved back below the 83.00 level to trade at 82.64 at time of writing.
So where next for the Euro?
Well the first step is a move beyond the 1.3000 level which should be achieved either later today, or early next week. Once above this level, the next key price point is a push through the price congestion of the last two weeks which extends to 1.3150, and should this be breached, as expected, then we should see a move in the short to medium term to test the underside of the next area of resistance in the 1.3300 region.
As always, volume holds the key, and yesterday’s narrow spread down candle was particularly revealing, with above average volume, giving a clear signal of a potential pause and possible reversal in the recent downwards trend. However, for this to be sustained, we need to see above average volume on the daily chart today, and if this occurs, then we can expect to see a follow through in next week’s trading, with a firm move beyond 1.3000 and on towards the 1.3150 price level, assuming of course, that there are no fundamental ‘after shocks’ – always an issue when trading the euro!
By Anna Coulling
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