EUR/USD Still Faces Key Resistance

The Euro steadied close to a 14-month peak against the greenback during the Asian trading session, but resistance which is set at $1.35 has still not been breached and currency experts say that without breaking that key psychological level that gains will be limited. However, recently improved economic data from the Eurozone, and especially from Germany, could provide the impetus for the Euro’s rise in which case the next major resistance level the EUR/USD pair would likely be at around $1.39.

As reported at 11:11 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3495, close to Tuesday’s high of $1.3498, the highest level in more than two months. Since the beginning of the year, the Euro has gained 2+% against the U.S. Dollar on investors’ belief that the Eurozone’s economy and banking sector has weathered the worst of the storm. One currency strategist cautions however that structural fundamentals have still not been resolved and are likely to continue to weigh on momentum.

Market players will focus their attention on the U.S. today and await the Federal Reserve’s monetary decision slated for later today. Analysts don’t expect there to be much change from existing policy and believe Ben Bernanke will confirm its commitment to the ultra-loose policy until such time as there is a marked improvement in the unemployment rate.