EUR/USD continues the surge: after crossing the round 1.35 level in the wake of the European session, the pair now continues and tests higher ground, above 1.3550, which is minor resistance. If this break is confirmed, the next resistance level isn’t that far.
With this move, the pair also breaks above uptrend resistance on the daily chart.
The next level is 1.3610, followed by 1.3690. For more on the euro, see the EUR/USD forecast.
The breakout comes on the background of a better-than-expected European Consumer Confidence figure: 89.2 instead of 88.2 points, and better than 87.8 seen last month. This is clearly not the main driver though: an improvement in the debt crisis is the main driver, despite the economic weakness of the region.
Another evidence of an improvement in the debt crisis was seen with an Italian 10 year bond auction: the yield dropped from 4.48% in the previous auction to 4.17% now.
Spain reported a contraction of 0.7% in Q4, and 1.8% year on year. This joins an already devestating unemployment rate of over 26%.
Another reason is the upcoming Fed decision later in the day: Bernanke is not expected to slow the dollar’s decline: no hints about the end of QE are expected.
European officials will likely sound more complaints about the high value of the single currency. The euro is also strengthening very nicely against the British pound and the Japanese yen.
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