EUR/USD for Monday, August 26, 2013
To close out last week the Euro made another run at the 1.34 level only to be turned away yet again and ease back under. It has started this week by consolidating in a narrow range between 1.3380 and 1.3390. Earlier last week it retreated heavily from above 1.34 after having reached a six month high around 1.3450. Over the last couple of weeks it has made several attempts to push through the 1.34 level only to be consistently repelled with ample supply. A few weeks ago it spent about a week drifting lower from the resistance level at 1.34 back towards the previous resistance level of 1.33. This level provided very little support for the Euro as it continued to move down strongly towards 1.3230 before consolidating recently above the support level at 1.3250. Several weeks ago it was able to push up through the 1.33 resistance level and continue on to touch 1.34 and reach a seven week high before easing back. Prior to that period, for a couple of weeks the Euro established and traded within a narrow range between two key levels of 1.32 and 1.33 as it continued to place pressure on the latter. During those couple of weeks as the resistance level at 1.33 stood firm, the Euro found solid support right around 1.3250 as well.
During that two week narrow range trading, it surged higher to reach a new one month high just shy of 1.3350 however it continued to meet stiff resistance at 1.33 during that time. In the week prior to that consolidation period between 1.32 and 1.33, the Euro enjoyed a healthy and steady rally towards the resistance level at 1.32 and finally made its way through culminating in its recent push higher. About a month ago the Euro was content to maintain the level above 1.31 and settle there, as it received solid support from both 1.30 and 1.31. On a couple of occasions it made an attempt to move within reach of the longer term resistance level at 1.32 and finally it finds itself trading on the other side of this level and being well established there. It has been some time since the Euro has experienced a 24 hour period with as much range as the period earlier in July when it surged higher from from below 1.28 up to above 1.32. Prior to that jump, the Euro had been in a very solid medium term down trend after succumbing to the resistance at 1.29 and moving down below the key long term level of 1.28. This resulted in it trading at a multi-year low near 1.2750. After reaching a four month high above 1.34 about seven weeks ago, the EUR/USD was in the midst of a very solid medium term down trend which has seen it fall sharply.
It was only a month or so ago that the 1.30 level was standing up and proving itself to be a brick wall of support, and even though it failed a couple of weeks ago leading to the new lows, it has since been called upon again to offer support over the last couple of weeks. Throughout May and most of June the Euro surged higher to a four month high above 1.34. Before that in the first half of May, the Euro fell considerably from near 1.32 down to six week lows near 1.28. Back at the beginning of April the Euro received solid support around 1.28 and this level was called upon to provide additional support. Throughout this year the Euro has moved very strongly in both directions. Throughout February and March the Euro fell sharply from around 1.37 down to its lowest level since the middle of November around 1.2750. Sentiment has completely changed with the Euro over the last few weeks and the last couple of months has seen a rollercoaster ride for the Euro as it continued to move strongly towards 1.34 before falling very sharply to below 1.29 and setting a 6 week low.
German Finance Minister Wolfgang Schaeuble said in a newspaper interview on Friday the European Central Bank (ECB) has made clear it will raise interest rates again once the economy improves and that he welcomed that prospect. “Low rates are above all an expression of insecurity on debt markets. That cannot last forever – even if it is a relief to the federal budget,” he said. “The central bank has announced it will raise rates again when the economy improves. That is good.” ECB chief Mario Draghi actually said after the last meeting on rates on August 1 that rates will remain low for some time. The ECB has based this ‘forward guidance’ on the inflation outlook remaining subdued, and growth weak.
(Daily chart / 4 hourly chart below)
EUR/USD August 25 at 22:30 GMT 1.3382 H: 1.3392 L: 1.3380
EUR/USD Technical
S3
S2
S1
R1
R2
R3
1.3300
1.3200
1.3000
1.3400
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During the early hours of the Asian trading session on Monday, the Euro is consolidating in a narrow range between 1.3380 and 1.3390 after finishing last week easing back under the key 1.34 level. Since the middle of June, the Euro has generally fallen sharply from new highs above 1.34, and has been looking to return back to the significant lows around 1.2800, however in the last month or so it has recovered well and moved back to above 1.34 again. Current range: trading in the range between 1.3380 and 1.3390.
Further levels in both directions:
• Below: 1.3300, 1.3200 and 1.3000.
• Above: 1.3400.
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 long position ratio has remained below 30% as the Euro has surged to near 1.34. The trader sentiment remains strongly in favour of short positions.
Economic Releases
22:45 (Sun) NZ Trade Balance (Jul)
23:50 (Sun) JP CSPI (Jul)
12:30 US Durable goods orders (Jul)
*All release times are GMT
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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.