EURUSD Respects Support, Rally Back to 11300 in Store
- EURUSD holds support in the low-11100s
- One-week implied volatility is at a low 5.47%, expectations for price swings subdued
- Rally towards 11300 may be as good as it gets in the coming week
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Last week, EURUSD put in a good test of support in the low-11100s, an area which we discussedas important to hold if the outlook is to maintain a bullish tone. On Friday, we saw a solid shove higher from support; again, reinforcing the importance of the area down to 11109.
One-week implied volatility is at a low 5.47%, pointing to market expectations for small price swings in the week ahead, and on that we need to keep expectations in check as we head into the new week. When volatility sinks to these levels traders are best served by taking trades off of levels and avoiding chasing momentum. With that in mind, and given how support has held, looking to buy dips appears to be the most favorable approach in the days to come. Looking higher, barring a significant catalyst, the euro will have a tough time trading above last week’s high. The reversal-day high last week came on an attempt to break into overhead levels created throughout 2016. At this time, it looks unlikely we will see the kind of buying pressure needed to push the euro through such hefty resistance. A move towards 11300 and stall in momentum may present an opportunity to fade for a move back lower, with an ongoing period of consolidation to continue. With an extended period of consolidation, the euro may poise itself for another surge higher later on down the road.
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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.