EURUSD - Set to Carry Higher into Thicket of Resistance Levels
- Attempt to push EURUSD lower last week met with strong buying pressure
- Look for the euro to push into overhead resistance before potentially stalling
- Key risk event this coming week arrives on Thursday with the ECB
Find out what’s driving EURUSD this quarter in our Q2 forecast.
Last week, we saw EURUSD dip and rebound sharply on Tuesday, carving out a key reversal day. Better yet, it came despite a breach of support in the mid-111s, demonstrating the significant buying interest in the euro these days (For more on that, check out this piece). The reversal-day led to solid follow-through for the remainder of the week. On Friday, further upside assistance was provided by a downbeat U.S. jobs report, where the headline NFPs figure came in light at +138k versus the +182k expected.
While the euro remains pointed strongly higher, it’s not without its hurdles to overcome in the week ahead. There are several swing highs around the corner from 11299 up to 11429. A move beyond the last level would clear a path towards the 2016 high at 11616. But from here that would be quite a move. The likely scenario is for the single-currency to notch out higher levels, but struggle to rise much above 11400 before pulling back again. A potential catalyst, though, which could send it through resistance levels comes on Thursday when the ECB meets. Expectations are for the central bank to keep current policy as is, but they may provide signaling to end its QE program by year-end. How much of this is currently priced in or will become priced in before the meeting is the unknown. Overall, though, the technical picture favors higher prices into the upper-end of the resistance zone, with dips likely to find sponsorship before then.
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.