After consolidating the previous gains for a few days, EUR/USD is now enjoying the lack of new worries and is surging to higher ground.
The pair broke above the minor resistance line of 1.3940 and already reached 1.3955, only 45 pips away from the round and politically sensitive number. Can it make the big break?
Here is how it looks on the 30 minute chart:
The worries about China that gripped markets certainly helped the US dollar against certain currencies, but the euro was spared. It enjoyed the back wind coming from Mario Draghi’s confident statement a week ago.
Despite yet another disappointing figure from China, weaker growth in industrial output, it seems that markets had enough of worrying, and the safe have US dollar was sold off.
The euro was well positioned to take advantage of the situation. The previous high of 1.3915 was easily taken and the pair is once again at the highest levels since October 2011.. 1.3940 was a line of support back a few years ago and it is gone as well.
1.40 is naturally an important line of resistance, being a round number, and is also politically sensitive. At this level, we could hear more talk about the high value of the common currency. The high value hurts exports and lowers inflation by pushing import prices lower.
The big question: how does the euro need to get before the ECB intervenes?
For more, see the EURUSD forecast.
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