If equity bears are having a tough time at present, euro bears have had a torrid time over the last few years, with each move lower acclaimed as the end of the single currency, which then promptly rises and continues to survive. Friday’s NFP data, gave the EUR/USD another shot in the arm following a week of sideways price congestion, with the pair basing in the 1.3570 area. The pair closed at 1.3666 on the week with a wide spread up candle and picking up the longer term bullish tone once again.
The move higher on Friday was much as expected, given the volume in the market on Wednesday, which saw the selling reflected in a narrow spread down candle, with Thursday’s rising volume and associated up candle, confirming this picture. Moving to the volume at price indicator on the left of the chart, the support region in the 1.3500 to 1.3570 area is now clearly visible with a deep volume bar, and once again with a bullish bias. To the upside we have modest congestion bars extending from 1.3600 through to the 1.3800 area, and for a sustained move higher, these resistance levels will have to be breached, which will require strong and rising buying volume. However, with a firm platform of support now in place, the EUR/USD is likely to move higher, first to test the 1.3750 area, and if this holds, then 1.3820 becomes a real target once again.
With little in the way of significant fundamental news in Europe this week, EUR/USD price action is likely to be driven by strength and weakness in the US dollar, rather than by the euro. Key numbers for the US come later in the week, so we may see some relatively muted price action on Monday, assuming that the ECB and politicians can refrain from speaking or commenting – I live in hope!
By Anna Coulling