Forex Technical Update
- EUR/USD continued the bearish run to start the week. There was a gap in favor of the USD as the first Asian session this week started.
- We are closing in on the support zone targeted after a break below the projected channel support.
- The 1.40 level should hold support ahead of the ECB meeting.
- The market has been pricing in a dovish ECB, one that would have to admit a longer hold of interest rate before hiking it.
- Other problems surrounding the Eurozone continue to plague the EUR currency, and with QE3 off the table for now, the USD is strong, though the NFP last Friday gave QE3 prospect some life again.
- If the market does find support in the 1.40-1.41 support zone, a rally might close above the opening gap, and try to knock at the 1.42 psychological resistance. Then, we'll see how the market reacts to the ECB decision. A break below 1.40 opens up 1.3850.
- A rally above 1.4260 gives some suggestion of a bullish scenario, or at least trouble with the bearish outlook.
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Fan Yang CMT
Chief Technical Strategist