EUR/USD took only a small pause after the surge that was triggered by Draghi, and is now making another move higher, breaking above the 2013 high of 1.3894 and is now at 1.3910 after already reaching 1.3914.
Will it shoot to 1.40 after the Non-Farm Payrolls?
The ECB didn’t surprise by not cutting the rates, but it did surprise some with no additional steps (such as sterilizing the SMP) and with the upbeat message. While Draghi did mention the impact of the exchange rate on inflation, he repeated the stance that this is not a target. Perhaps at 1.40 we will hear some louder complaints.
It is important to note that the 1.3894 high was reached in late December 2013, during a period of low volume, thus making it somewhat less important as resistance. The next line is 1.3940, and the 1.40 is the obvious upcoming resistance line that also has political significance.
Here is the chart:
Some support is found at 1.3832, which was stronger resistance back in 2013, and 1.3773 is the next line.
The US dollar is on the defensive also against other currencies, with NZD/USD and AUD/USD enjoying a better “risk” atmosphere.