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Euro Tests Critical Resistance, $1.35 likely?

Euro Tests Critical Resistance, $1.35 likely?

David Rodriguez, Head of Product
ssi_eur-usd_body_Picture_6.png, Euro Tests Critical Resistance, $1.35 likely?

EURUSD – Retail trading crowds have aggressively sold into recent Euro strength against the fast-falling US Dollar (ticker: USDOLLAR), giving us contrarian signal that the EURUSD may continue to fresh highs. Last week we claimed that a sharp shift in retail sentiment favored EURUSD losses, but markets clearly had other things in mind as the single currency remained in a choppy trading range. If price action remains choppy, this may be an opportunity to buy into US Dollar weakness.

Yet a EURUSD break above the 4/5 high of $1.3163 leaves little in the way of technical resistance beyond the 3/29 low of $1.3250 and eventually the March high of $1.3380. What might ultimately decide whether the US Dollar hits fresh lows against the Euro? The Dow Jones FXCM Dollar Index sees critical support at 9893. We believe a significant break lower in the USDOLLAR could ultimately push the Euro/US Dollar to February peaks near the $1.35 mark. The flip in retail sentiment leaves our short-term bias to the topside.

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com; Contact David via Twitter at http://www.twitter.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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