Wednesday 4 March 2015
Monday 2 March 2015
EUR/USD VIEW
The euro is not out of the woods by a long shot yet, but this morning’s data suggests that EUR/USD could continue to hold above its 12-year low at 1.1100 in the near term. The chart broadly supports this view: though it’s too soon to call today’s trough a higher low, the current bullish divergence with the RSI indicators suggests that selling pressure is receding. Meanwhile, rates could be forming a bullish Piercing Candle*, which if confirmed, would indicate an intraday shift from selling to buying pressure and raise the probability of a rally from here.
In the immediate term, the February lows near 1.1280 could now provide resistance on any rallies, and if that barrier is eroded, a move back up to the 23.6% Fibonacci retracement at 1.1440 could be seen next. Of course, a run of strong US data or a renewed downturn in Europe could always change this cautiously-optimistic view of the pair, so if we see a break to new lows under 1.1100, bulls may abandon their positions as sellers press for the 1.10 level.
**A Piercing Candle is formed when a candle trades below the previous candle's low, but buyers step in and push rates up to close in the upper half of the previous candle's range. It suggests a potential bullish trend reversal.
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