Forex Technical Update

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EUR/USD 7/26/2011 Daily chart
In the Daily Chart:

- As the EUR/USD breaks above 1.4450, it is shown in the daily chart breaking above a projected trendline of a consolidation pattern.
- The market stayed above the 200SMA and a rising trendline during the Greek debt crisis (which is not over yet).
- The RSI reading stayed above 40 despite being cracked a few times. Now it is trying to go above 60, and show maintenance of the bullish momentum.
- The 1.4940 high is in sight, with minor resistance expected at the 1.4577 and 1.4696 pivots.
In the Monthly Chart:
- For intra-day traders the daily chart may have shown a long-term trend, and the monthly chart must feel like eons.
- However, it should be noted that in this long-term picture, we are also in the market in the process of breaking above a projected trendline.
- The breakout was stalled this year in May but as we saw in the daily chart, the EUR/USD spent the last few months in a consolidation pattern that is breaking to the upside.
- Note the RSI reading in the monthly chart is also trying to break above 60 and show maintenance of the bullish momentum after being able to keep the indicator mostly above 40.
- The long-term bullish targets above 1.4940 has 1.5140 and then 1.6020 in sight.
- The 1.6020 level however is going to be hard to reach as it reflects the high before the global markets plunged. The thing is that dynamics have changed in that the USD is losing its safe haven appeal. EUR doesn't have to be strong in it's own right. The market now is basing this rally on the prospect the ECB will be expected to raise rates before the FED.
EUR/USD 7/26/2011 Monthly Chart

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Fan Yang CMT
Chief Technical Strategist