Euro Trying to Establish Support at $1.50

The EUR USD is still struggling with the $1.50 barrier.  Like Gold didrecently with the $1000 area, this market may have to trade a few timeover $1.50 before establishing support.

The EUR USD is still struggling with the $1.50 barrier.  Like Gold did recently with the $1000 area, this market may have to trade a few time over $1.50 before establishing support. 

Trader seem a little reluctant to get aggressively long in this area because of nervousness over comments earlier in the week from Euro Zone Finance Ministers.  Based on recent economic data, the Euro Zone seems to be recovering faster than the U.S. and Japan economies.  This means the European Central Bank is likely to leave its benchmark interest rate at 1%. 

The primary concern of the Euro Zone ministers is not only the possible detrimental effect of a stronger Euro on exports, but also excessive volatility. It’s no secret that the Euro Zone needs a strong Dollar to boost exports, but with U.S. interest rates low and the deficit growing, investors are still more attracted to the higher yielding Euro.

With the Euro struggling near $1.50, it is possible that this market could break because of the lack of buying interest at current levels.  If a short-term top does develop then look for a possible correction to 1.4763 – 1.4696.  This correction will not necessarily trigger a change in trend, but a closing price reversal down on the daily or weekly charts would be a strong sign of an impending break.