Forex Technical Update
The failure to break above 1.37 in Wednesday's US session lead to a push back towards the double bottom established earlier in the week. However, the market remained above the 1.3520 level and pushed right back up nearly to Wednesday's high. Thursday's US session begins with the continuing theme of a correction rally, which opens up further if 1.37 breaks. If the US session fails to break above 1.37, it will be important to see if it can stay above 1.36. Failure to do so has bearish implication for the EUR/USD as the week winds down and all the votes for the European Financial Stabilization Fund (EFSF) are passed (Austrian vote on Friday).
The bearish continuation starts with a break below the 1.3480-1.35 area. This has a near-term bearish target to 1.3390. Then below 1.3350, we open up the 1.29-1.30 lows of 2011 and late 2010.
The bullish break above 1.37 opens up 1.39-1.3950.
US Jobless claims fell below 400K (391K, forecast 420K, previous: 428K). While this is in no way a sign of improving employment trend, it provides a slight risk appetite that can support the EUR/USD correction rally. Let's see if the market can maintain above 1.36 in the US session.
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Fan Yang CMT
Chief Technical Strategist