Image © European Central Bank
The EUR/USD exchange rate has rallied to its highest levels since early March and is quoted at 1.1415 at the time of writing on Wednesday. Analyst and technical forecaster Richard Perry of Hantec Markets says a close above $1.1420 today opens the door to $1.1490.
The euro bulls have taken a decisive step forward in the past couple of days.
The outlook on EUR/USD has begun to really take on a positive bias once more.
Strengthening over the past two weeks, a decisive bull candle with a close above $1.1350 has cleared a key band of near term resistance and means that the bulls are now primed to test the June rally high of $1.1420.
A run of higher lows and higher highs have formed a mini uptrend channel which today crosses the $1.1420 resistance.
It is interesting to see that the market has already had a look early this morning at the resistance before just backing off slightly.
Daily momentum indicators are increasingly positively configured now, but also retain further upside potential.
Stochastics have only just crossed into bullish territory, whilst RSI is strong in the mid-60s and MACD lines have only just bull crossed higher.
Given the momentum set up, we would view near term weakness as a chance to buy.
The old key breakout resistance of $1.1350 is now a prime area of underlying demand, and any supported dip back into $1.1300/$1.1350 is a good buying opportunity now.
A close above $1.1420 opens $1.1490 which is the key March spike high and the long term resistance around $1.1500 which we expect to be tested in due course.
The higher low at $1.1255 is now key support.
Dollar Put Back Under Pressure
Once more the daily see-saw of risk appetite has taken affect as sentiment picks up again. Could it be that this time drives a decisive move?
The swing back to positive risk has been driven by the results of a COVID-19 vaccine by US pharma company Moderna.
Results were “robust” with antibodies present in all 45 test subjects.
The development of a reliable vaccine is the key to opening the door to a serious recovery for markets and traders will need to assess the implications of these results.
Previous positive vaccine results have seen risk appetite peter out quickly in recent months. It is interesting to see that there was a decisive swing higher on Wall Street, that is continuing on futures today.
The US dollar is under pressure across the major currency pairs. Higher beta majors are performing well.
Is this move set to break markets out of their month long consolidations? There have been some early calendar events that could also forge moves today.
As expected, the Bank of Japan sat on its hands for its monetary policy decision, with no shift on rates or its yield curve control.
However, UK inflation has ticked higher than expected (on both core and headline) leading to an uptick on sterling today.
For later today, the survey data from the New York Fed could give an early insight into July and will be an interesting watch.