EUR/USD for Wednesday, December 11, 2013
The Euro has enjoyed a solid move higher now for the last week and in recent hours has run into a wall of resistance at 1.38. To finish out last week and to start this week it moved very well away from the key 1.3550 level and to 1.37 and beyond, representing a new six week high. To finish out the week a couple of weeks ago the Euro settled right around the 1.36 level after earlier in that week moving up strongly through the resistance at 1.3550. In the week prior the Euro did well to bounce strongly off support at 1.34 and recover the lost ground from the previous couple of days which saw it fall from the resistance level around 1.3550. This was after a few weeks which saw it move steadily higher from a support level at 1.33 back up to a three week high just above 1.3550. Over the last month or so 1.3550 has been a key level. Towards the end of October the Euro enjoyed a strong surge higher to move through to its highest level in nearly two years just above 1.38 before spending that week content to consolidate around this level. Over the following three weeks it fell heavily down to a support level at 1.33 before recovering well over the last few weeks. It moved quite well throughout the middle of October after breaking higher from its sideways range. For the month leading up to that, the Euro traded within a narrow range between 1.3450 and 1.3650 before the range narrowed down to between 1.35 and 1.36. The former level of 1.35 was strongly tested a few weeks ago and has resurfaced as a significant level presently.
Throughout August the 1.34 level had been causing the Euro headaches however several weeks ago it surged higher and moved through there to its then highest level since February just shy of 1.3570, which was past a couple of weeks ago moving to just shy of 1.3650. About a month ago the Euro fell strongly away from the resistance level at 1.34 back to below the support level at 1.32 and in doing so traded to its lowest level in seven weeks very close to 1.31. Looking at the bigger picture the Euro spent a lot of August and September trading within a range between 1.32 and 1.34 before recently pushing its range to between 1.3450 and 1.3650. Back in early July the Euro was content to maintain the level above 1.31 and settle there, as it received solid support from both 1.30 and 1.31. On a couple of occasions it made an attempt to move within reach of the longer term resistance level at 1.32 and finally it finds itself trading on the other side of this level and being well established there.
Throughout May and most of June the Euro surged higher to a four month high above 1.34. Before that in the first half of May, the Euro fell considerably from near 1.32 down to six week lows near 1.28. Back at the beginning of April the Euro received solid support around 1.28 and this level was called upon to provide additional support. Throughout this year the Euro has moved very strongly in both directions. Throughout February and March the Euro fell sharply from around 1.37 down to its lowest level since the middle of November around 1.2750. Sentiment has completely changed with the Euro over the last few weeks and the last couple of months has seen a rollercoaster ride for the Euro as it continued to move strongly towards 1.34 before falling very sharply to below 1.29 and setting a 6 week low.
European Central Bank President Mario Draghi called on national governments to deliver economic reforms and complete a banking union, saying the ECB had won time for action by delivering price stability over the past 15 years. “It is now crucial to complete this agenda at the European and national level,” he said in a speech at a conference in Rome on Tuesday, adding that governments should focus on key reform priorities: “completing the banking union, implementing growth-friendly fiscal consolidation, and structural reforms in labor and product markets”. Draghi said the ECB had to keep public trust by sticking to its mandate of delivering price stability and dismissed concern that low inflation threatened to pitch Europe into a Japanese-style deflationary cycle.
(Daily chart / 4 hourly chart below)
EUR/USD December 10 at 22:05 GMT 1.3759 H: 1.3795 L: 1.3740