EUR/USD resumes climb, hits one-year high after earlier stumble
James Chen, CMT June 28, 2017 8:32 PM
Despite a euro setback on Wednesday morning after reports that markets may have misinterpreted ECB President Mario Draghi’s Tuesday comments that seemingly hinted at impending ECB tapering, EUR/USD quickly reversed those earlier losses and began to climb once again. This climb extended Tuesday’s dramatic surge above the key 1.1300 level that was initially driven by Draghi’s perceived hawkishness. In the process of extending its rise on Wednesday, the currency pair hit a new one-year high just short of the 1.1400 level.
Contributing substantially to this rise was a further-weakened US dollar that has not been able to make any meaningful rebound or recovery lately despite a recently hawkish-leaning Federal Reserve. In addition, expectations remain that the ECB may make some kind of tapering announcement in the next several months. This speculation over a potentially hawkish turn by the central bank in the wake of Draghi’s comments on rising inflation has helped to keep the euro supported.
Technically, as noted, EUR/USD has confirmed a key technical breakout above the 1.1300 psychological level. This also confirms a continuation of the bullish trend since the beginning of the year. With any further dollar weakness and continued support for the euro above 1.1300, the breakout has a potential to extend towards the next major upside target around the key 1.1450 price region. With any further breakout above that resistance, a further resistance objective can be found at the 1.1600 level, last tested over a year ago in May 2016.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.