Another good at the office for euro bulls as the eurodollar continues to surge higher, moving strongly through the 1.3500 price point to trade at time of writing at 1.3546. However, ahead of some heavy duty economic data this needs some careful scrutiny. So, let’s take a closer look at the technical picture on the daily chart.
The first thing to say about the daily chart is that the most significant candle of the past few days trading was that of last Friday which saw the pair finally breaking out of the narrow trading range of 1.3260 to the downside and 1.3385 to the upside, and closing the session firmly above at 1.3456.
The result of this price action has been to create the firm platform of support below which was further reinforced by an isolated pivot low, posted two days earlier at 1.3263 and which gave the eurodollar the impetus to break free.
Second, moving to our indicators, both the trend on the daily and three day charts remain firmly positive, along with the associated volumes, which on the daily chart also remain firm and rising.
Finally, the heat map too reflects this positive sentiment, having transitioned through to bullish earlier in the month.
With very little ahead in the way of price resistance it is possible that we could see the eurodollar continue to push on in the medium to longer term, even to test the underside of the 1.3960 area where a deep level of price congestion awaits, a originally formed back in 2011.
As mentioned above, from a fundamental perspective, today sees the start of some major economic releases which will be dominated by three from the US. First, the ADP employment numbers, always a precursor to the NFP on Friday, advanced Q4 GDP and finally the FOMC statement – so expect to see some lively price action during today’s trading session.
Finally, we it may be pertinent over the next couple of days to pay close attention to the weekly USD Index chart which is fast approaching a key technical level.
By Anna Coulling