Euro: Points of Resistance

The EUR/USD has enjoyed a tremendous rally today thanks to weaker U.S. economic data, hawkish comments from ECB President Trichet and successful bond auctions in Spain and Portugal. The rally in the EUR/USD is the strongest in nearly 3 months and has led many people to believe that the downtrend in the EUR/USD is finally over. However in order for that to happen, the currency pair needs to break a very significant resistance level that sits not far above the current price. The EUR/USD has already broken its near term support of 1.3320, the 50-day SMA and the new resistance level is now 1.3425. A break of this level is much more significant than any of the breaks that we have seen today because this is where we have the 2nd Standard Deviation Bollinger Band, the 100-day SMA, former highs and the 38.2% Fibonacci retracement of sell-off that lasted from November to January. Not to mention that the European Sovereign debt problems have not gone away. A default may not be an imminent risk, but unless you have gone long euros already, I wouldn’t be a buyer unless it dips to 1.3050 or clears 1.3450.

About Kathy Lien 236 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of DailyFX.com, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Investopedia.com Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for Tradingmarkets.com, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

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