Nick Nasad
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EUR/USD: Has 1.38 Proved Too Strong to Overcome?

The past 2 months have been very good ones for the EUR/USD as it has pushed from 1.33 all the way to 1.38.

  • The recent price action in the daily has gotten rather interesting at these levels.
  • First, the 1.38 level has proven to be ferociously defended, first in late October, the again in mid and late December.
  • What's telling was the spike higher through that level which was not sustained. With a new month, and a new year, is it time for a bit of a pullback for the EUR?
  • Currently we find ourselves with a very nice support pivot at 1.3625, which like 1.38 has held strong during the 2nd half of December.
  • For the bearish case, the pair did manage to crack an upward sloping support trendline, and after the false breakout to the top has put in a fairly strong bearish candle today. The key then for the bears would be to drive price below the support and turn that support level to resistance.
  • On the other hand, for the bulls, the pair would need to clear the 1.38 level - this would come via some USD weakness or EUR strength.
  • My macro bias leans towards a stronger USD because of its better economy, the start of Fed tapering, and the possibility that the ECB will do more to help.