EUR/USD at 7 month high, above uptrend resistance after

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The Fed sent the dollar plunging with the surprising decision to refrain from tapering, and this triggered a major breakout for EUR/USD, including a breakout of uptrend resistance.

The world’s most popular pair is at levels last seen in February, when the pair was falling from a shot higher to 1.37. Can the pair tackle this level soon? The high level of the euro could hurt the fragile recovery.

The daily chart clearly shows the big breakout:

EUR to USD Higher after Fed NO Taper September 19 2013 technical analysis chart for forex trading

Euro rise justified? Or a free ride?

EUR/USD already began the week higher, thanks to Summers’ withdrawal from the Fed race, and now the common currency can thank the Fed once again.

The Fed still needs more evidence before it tapers, even though the US economy continues growing for 4 years. In the euro-zone, the second recession ended in Q2, but many warned it could be temporary, or as ECB president Draghi said: “green”. 

Should we rely on the strong business confidence from Germany, or on weak industrial output from the zone’s biggest country? Can Spain be indeed on the verge of exiting the recession thanks to exports, or will the higher value of the euro curb the enthusiasm?

At the moment, the No Taper surprise rules the markets. The hints by the Fed of QE tapering in June pushed peripheral yields higher, and now, the flow of USD can continue searching for higher yields – effectively pushing them down and depressing a potential new round of the debt crisis.

EUR/USD levels

By shooting higher, EURUSD broke above the June peak of 1.3415 quite easily and settled above 1.35. It temporarily breached the 1.3529 level which was a swing high in February and served as a minor line.

The next challenge is 1.36: a round number that also worked as resistance early in the year. 1.3650 is minor resistance after working as resistance before and after the next level.

1.3710 is the year to date high for 2013, and could be a tough cap for the pair. It only stayed there for a short while in February. If this level is broken, 1.3830 is the next serious barrier.

For more levels, events and analysis, see the Euro to USD forecast.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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