By: Mike Kulej
The Euro has remained in a distinctive uptrend, continuing trucking to the upside. With Irish and Spanish bonds having a solid selling, the Euro is showing considerable progress. Despite mixed economic data, the Euro rallied to 1.29 against its arched nemesis, the United States Dollar.
European Current Account figures slipped by 4.6 Billion versus 3.6 Billion eyed. German Economic Sentiment dropped to 14.0 from 21.2 prior, while Euro-zone’s Economic Sentiment rose to 15.6 from 10.7. The figures seem to be misleading as German figures and Euro-zone’s figures tend to move in junction. However, the big catalysis to a strong action in the Euro was a solid bond action of Irish and Spanish bonds. With sovereign debt issues still in the back of the minds of investors, positive bond auction remains one of the drivers for the Euro. Irish bond auction (997% debt-to-GDP ratio) came in with demand three times that of offering.
Looking at the technical analysis spectrum, we find that Euro remains in relatively stable intermediate uptrend. However, the tides might be changing if the EUR/USD pair can fall below pivotal technical levels. Current support lingers at 1.2830, represented by 20-period SMA on 1 hour Charts. The following level is also a lower bound of uptrend channel. The volume gauge has increased during selling of the EUR/USD suggesting that a move to the bottom of the channel is highly probable.
Nonetheless, 1.2830 will act as a key barometer whether or not the current rally will hold. A move below 1.28 is highly likely within the next 24 hours if the support level is breached. On the upside we see a strong resistance level of 1.2920. The current resistance level is represented by the high of the day which failed to be cleared for the second consecutive session. There are no key economic events which may spur the currency pair in either direction, therefore, anticipate technical’s to rule the day.
