EUR/USD finally made the long waited drop – it tumbled down below 1.3423 in a very convincing way.The drop continues. The move has a big potential.
EUR/USD began the move from the previous lows of 1.3440, pierced through the historic line of 1.3423 (May 2009), then temporarily relaxed at 1.34 before moving lower. It almost touched 1.3350 before bouncing slightly higher to 1.3377 at the time of writing. The move isn’t over. Let’s examine it:
The next significant technical barrier is only at 1.3080, This was the line where EUR/USD began the long term upwards move in March 2009. So, the move has a great potential. 50% of the 1.3423 to 1.3080 range is at 1.3250. EUR/USD could approach these levels rather quickly.
This came just one week after EUR/USD tested the important resistance level of 1.3850. The failure to break this level was also a failure to remain in the uptrend channel. I then wrote that EUR/USD is rising only to plunge later. And now the plunge came.
The main fundamental reason for this plunge is the Greek crisis. The major European countries failed to resolve the issues with the European Union, and called the International Monetary Fund (IMF) for help. Calling the IMF means a delay in a resolution and a blow for Europe’s internal strength. Needless to say, this is bad for the Euro.
The speed of the fall eased on the release of another fundamental event: the German Ifo Business Climate. This survey was better than other indicators in recent months, and also now, it reached the highest score in 10 month, exceeding expectations and reaching 98.1 points.
The next major events that will impact the pair come from the US: durable goods orders and new home sales today, jobless claims and Ben Bernanke’s testimony tomorrow and Final GDP on Friday. The European indicators in the rest of the week are less important, but the news from Greece, especially from the politicians, will shake the pair.
In addition to the move against the dollar, the Euro is falling also against other currencies. EUR/GBP made a significant drop from 0.8980 to 0.8930. EUR/AUD, that already fell to a decade low a few weeks ago, reached a 13-year low at 1.46.
It’s interesting to note that EUR/CHF is going up. After reaching an all time low under 1.4230, this cross is rising now. It looks like an intervention from the Swiss National Bank is happening. Only hours ago I wrote about a possible intervention on EUR/CHF.
EUR/USD is providing action, finally out of range.
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