An interesting day for the euro dollar which has seen the pair soar from a low of 1.3204 to trade, at time of writing, at 1.3354, and no doubt catching out the euro bears, once again. And this move higher mirrored by a strong move lower in the US dollar index, as outlined in yesterday’s post, and the traditional ‘old style’ index is now testing the 81 price region, where a potential platform of support now awaits.
From a technical perspective today’s surge higher for the eurodollar was no great surprise, given the narrowing spreads of the last few days and a lack of bearish momentum, coupled with the deep platform of support at 1.32 which duly held. The question now is whether the pair, driven more by US dollar weakness, has gathered sufficient momentum to breach the key resistance now in place at 1.34.
This was the level that capped the June rally, and the price action last week, making it hugely significant. Any move beyond this price point needs to be accompanied with strong and rising flows in order to validate the move. However, with the US dollar index now also testing key support levels do not be surprised to see the US dollar bounce higher with a consequent reversal in the eurodollar.
By Anna Coulling