The EUR USD made a new high for the year in a move that fueled a strong breakout to the upside. German economic reports this morning offset each other, leading to the belief that this rally is being fueled by a desire for higher yielding assets. This morning’s reports showed a rise in German exports but weakness in German industrial production.
Technically, today’s breakout to the upside helped form a new main bottom on the weekly chart at 1.4045. This currency pair is now trading inside of a major retracement zone. The main range is 1.6039 to 1.2329 with 1.4184 to 1.4622 forming the retracement zone.
The upside momentum should help this market challenge 1.4622. Watch for selling pressure to develop on the first test of this level. A breakout above this level will trigger a test of the December 2008 top at 1.4719 and possibly the September 2008 top at 1.4866.