EUR/USD Broke Above Significant Barrier on US Weakness
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EUR/USD Broke Above Significant Barrier on US Weakness

EUR/USD reached a fresh 5 month high, and more importantly broke an important resistance line. This comes on top of weak US data and good European data.

Euro/Dollar broke above the important barrier of 1.3435 – this was a stubborn support line back in February. The Euro didn’t fall below this point and it happened only at the end of March. After a struggle, this line was finally broken to the upside.

EUR/USD trades at 1.3465, up from 1.3320 earlier in the day. An attempt to break this line on Wednesday failed. This is the highest level since April 21st. The next level on the upside is 1.3530, followed by 1.37. Looking down, 1.3267 and 1.3110 will support the pair if it loses ground.

The Euro enjoyed a better-than-expected report from Germany – the Ifo Business Climate rose to 106.8 instead of falling.  In the US, Durable Goods Orders fell by 1.3%, more than expected, but the core figure rose by 2%, higher than expected.

American New Home Sales came out almost as expected – an annual rate of 288K, just under 292K that was predicted, and close to last month’s 276K. This is a weak figure, but expectations were low.

EUR/USD enjoys risk appetite trading. The market prefers “risky” currencies such as the Euro over the “safe haven” dollar. The markets are currently disregarding the European debt problems, which haven’t gone away.

Bond yield spreads  between Ireland and Portugal over the benchmark German counterparts reached new highs, meaning that there still are worries about whether these countries can pay their debt. Nevertheless, the Euro enjoys a very strong rally.

Will it last?

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Yohay Elam

Yohay Elam

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.