February 10, 2014 – EUR/USD (daily chart) has been in a general rally for the past week as it attempts to recapture lost ground from the prior week. The currency pair has climbed back up to revisit its 50-day moving average after falling well below it in late January. The rebound that occurred early last week came after the pair dipped slightly below its key support level of 1.3500, which also happened to be just above the 38.2% Fibonacci retracement of the bullish trend from the July 2013 1.2750-area low up to the 1.3892 two-year high, which was established at the very end of 2013.
The dip that occurred towards the end of January also stayed above the pair’s 200-day moving average, which suggests that the trend’s directional bias is still pushing to the upside. Key resistance currently resides around the 1.3700 level. In the event that EUR/USD extends its rally above this level, major upside targets reside around 1.3800 and, on a breakout above the noted 1.3892 two-year high, the 1.4000 psychological level. To the downside, the 1.3500 area and the 200-day moving average should continue to provide support for the pair within the context of the current bullish trend.
James Chen, CMT
Chief Technical Strategist
City Index Group
Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.
