EUR/USD managed to break about to levels last seen in January 2010, even before the all-important rate decision tomorrow. Will this move continue into a long rally? Or is this a big false break that could be reversed when the rumor turns into a fact? Here’s a quick update on technicals, fundamentals and community trends.
EUR/USD Technicals
- Asian session: Active session sees Euro.Dollar move higher within the range, settling above the very minor line of 1.4250. The breakout happened at the wake of the European session.
- Current range – 1.4282 – 1.4450
- Further levels in both directions: Below 1.4282, 1.4160, 1.4030, 1.3950, 1.3860, 1.3760, 1.37, 1.3610, 1.35, 1.3440, 1.3334, 1.3267, 1.3180, 1.3080, 1.2970.
- Above: 1.4450, 1.4580, 1.48, 1.50.
- Breakout! After the second time this week that EUR/USD approached the critical resistance line of 1.4282, it made a breakout, and went as high as 1.4315 before a small retreat.
- 1.4160 is immediate support, but 1.4030, the important support line is the bottom border of the range is much more important.
Euro/Dollar dropping to mid range – click on the graph to enlarge.
EUR/USD Fundamentals –
- 9:00 European Final GDP. Exp. +0.3%.
- 10:00 German Factory Orders. Exp. +0.6%.
* All times are GMT.
* Post updated 8:00 GMT.
For more events later in the week, see the EUR/USD forecast
EUR/USD Sentiment
- Fed becoming hawkish: The FOMC Meeting Minutes have shown that the members of the Federal Reserve tend to end QE2 and even raise rates. This is in line with their recent speeches. Two members, Charles Plosser and Narayana Kocherlakota are talking about raising the rates. This dollar bullish tone was shattered by William Dudley, a senior member who was very worried about the economy.The hawks at the Fed still don’t match Trichet, but the tone is definitely shifting and helping the dollar. Also Ben Bernanke repeated the same cautious stance. It seems that the hawks are many, but the important people are doves.
- European officials state rate hike is underway: European central bankers make their message very clear – the rate is going to rise. These talks sent the Euro higher, and they join the mix of European talks. The rate decision happens on Thursday, and is a key event for the Euro. Will we have a “buy the rumor, sell the fact” scenario? See the ECB Preview for details.
- Bailout for Portugal – After the Portuguese government collapsed, the recent credit downgrades by Moody’s, Fitch and S&P and the yields that are over the roof, ECB member Evald Nowotny made an open call for a bailout. Now we have a call for an emergency loan of 15 billion for Portugal, as there’s no government in Lisbon to handle the bailout. This isn’t good for the Euro. Yields continue to rise.
- China tightening: Fresh tightening moves by the economic giant have been shrugged off by the markets.
Currensee Community: 53% are long , 47% are short. These are 674 open positions in real accounts trading this pair at the moment.
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