Forex Technical Update
Previous: EUR/USD Held Under 1.35... (2/27)
EUR/USD's corrective decline to start the week of 2/26 has respected a rising trendline albeit cracking it. The reaction during the 2/28 US trading session was a sharp one, falling below the trendline, but whipping back above it very sharply. The RSI is stuck roughly between 40 and 60, but the latest price action holds the RSI reading above 50, reflecting bullish bias.
Another attack toward 1.35 is imminent, but first with the 1.3480 level acting as resistance. A break above 1.35 opens up 1.36 and some key resistance factors just above 1.36 (though it might be hard to get to 1.36 with the LTRO2 risk event just ahead).
With LTRO2 looming on 2/29, the EUR/USD market continues to price in hope that this second round of LTRO will be taken up by banks in the Eurozone and provide liquidity and preventing the crisis to spin further out of control. So it is a hope that a negative thing is becoming more negative - not exactly an overwhelming positive factor for the Euro.
So as the market nears 1.36, and the first reactions from banks in the Eurozone is monitored, we can have a buy the rumor sell the news scenario. Until then, EUR/USD remains bullish, with an anticipated foray to the 1.35 level today.
Here is Nick Nasad, Chief Market Analyst's forecast for the reaction to LTRO2. 2 Possible Market Responses to LTRO2, and Impact of LTRO1
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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