A strong fundamental report drove the EUR USD higher on Thursday.Following four days of lower-lows, the Euro came back with a vengeanceas the European Commission’s gauge of economic sentiment postedstronger-than-expected results.
A strong fundamental report drove the EUR USD higher on Thursday. Following four days of lower-lows, the Euro came back with a vengeance as the European Commission’s gauge of economic sentiment posted stronger-than-expected results.
Shorts covered following the news as it somewhat diminished Wednesday’s comments from a European Central Bank member calling for the possibility of an interest rate cut to below 1%. Shorts were pricing in a rate cut on expectations of a worsening Euro Zone economy. Although today’s report still showed that consumer confidence was down, the improvement in the retail confidence index indicated that consumers were still willing to spend.
Technically, this market is at a critical juncture. Based on the longer-term charts, 1.4184 is still key 50% retracement resistance. Last week’s high at 1.4050 has also been flagged as a main top on the swing chart because of the four day decline. A failure to penetrate this area will indicate that the selling is greater than the buying at the current price levels.
The action the past few days indicates how sensitive this market is to news. The recent violent swings in the market have for the most part been triggered by speculation. With the next ECB meeting coming up on June 4, traders will begin to look for more solid information to use in order to determine the direction of the ECB committee members.