EUR/USD flies away, but resistence major threaten the sustainability of the rally

© O Financista.

By David Wagner – In the context of the euphoria that has livened up the markets yesterday, one of the assets that has grown the most has been the Euro, with the EUR/USD pair has exceeded 1.09 yesterday and scored a new high of 1.0945 this morning after a few hours break during the night.

Recall that the EUR/USD has benefited from the dual impact of the rise of the Euro, and the Dollar’s decline.

The Euro has clearly benefited from the announcement by France and Germany of a draft plan of european recovery through grants, and not loans to be repaid, for a total amount of over 500 billion Euros.

And although this plan has yet to be approved by the 27 member States of the EU, the franco-German initiative has been widely praised by traders, as we have seen with the rise of the Euro, but also with the CAC 40 and the DAX both closed up over 5% yesterday.

On the side of the Dollar, it should be noted that the greenback was on the defensive after the interview with Jerome Powell’s last weekend, during which he said that the Fed was not short of ammunition, which suggests a possible new easing, while the Fed has also ruled out the idea rate negative.

It should also be noted that the promising results of the phase 1 trials of the vaccine against the coronavirus covid-19 Moderna have boosted the general optimism of the market, which has also weighed on the dollar because of its safe-haven status.

Today, the traders of EUR/USD will be the ZEW index of economic sentiment in Germany at 11 am, before the building permits and housing starts US in the month of April at 14.30, and the testimony of Powell before Congress on US to 16h.

Technical thresholds to monitor on EUR/USD

From the point of view of the analysis graph, the return above 1.09 is a bullish signal, but this also increases the risk of a correction, knowing that the pair is approaching an obstacle key.

Before the psychological threshold of major 1.10, reinforced by the MM200 days to 1.1015, we find, in effect, the moving average 100 days, which had halted in net the last rally in the CAC 40 of 29-30 April and 1 may.

If all these resistances are breached, the next targets to the upside will be the psychological threshold of 1.11 and the peak of the march 27, towards 1.1150.

If, on the contrary, a correction is on the horizon, 1.09 will be the first medium potential to monitor, prior to 1.0830-35 (moving averages 100 and 200 hours), and then 1.08.

Like this post? Please share to your friends:
Leave a Reply