The EURUSD extended up toward the days highs, and the highs from April 21st (at 1.4648) and found willing sellers. As the price was reaching the level, headlines from ECBs Gonzalez-Paramo saying the “rate hike in April was not the start of a series of hikes” helped take some of the upward momentum away from the pair and thwarted the efforts to extend higher - for the time being at least. Downside support comes in against the 100 bar MA on the 5 minute chart (at 1.4596) and the 38.2% of the days range at the 1.4591 level. A move below these levels should solicit another move lower for the pair today.
Overall, the bias is still bullish with the price failing on the break below the 100 hour MA earlier today. However, the bulls have to be cautious given the ceiling. On the daily chart (see below), the price has channel trendline resistance at the 1.4685 area. This would be the target on a break of the ceiling at the 1.4651 area. The channel has provided good support and resistance levels for the pair.
Despite the bullishness, I get the feeling that despite the dollar weakness, Trichet and Co. at the ECB are scared of a too strong EURO. The currency is elevated against the GBP and USD, in the middle of a 6 month range against the surging CHF and in the top 1/3 of the recent range against the JPY. So although inflation is elevated, the currencies relative strength should act as a slowing mechanism for the region. Trichet would like slower growth to keep inflation contained but at the same time, I suspect he is a little concerned about growth (although he won’t admit it).
Written by Greg Michalowski.
No comments:
Post a Comment