EUR/USD rose gradually towards 1.33 but eventually fell down, not so gradually. The pair reached 1.3306 on Friday, making this level a double top.
Curiously, 1.3306 was also resistance back in December 2012. During that month, further attempts to reach this line sent the pair quite close, but not there, until the pair eventually dropped. Will we see a repeat of this scenario?
Here is how it looks on the daily chart:
The background for the recent moves of the euro comes from Germany: the Constitutional Court is discussing complaints about the ECB’s OMT program – a program to buy bonds. Senior politicians and central bankers stand before the court, talking about the program, but no ruling is expected today.
In general, the expectations are for a green light for the program, even if conditions are put in place. So, no news from Karlsruhe mean good news for the euro.
However, there are other things going on, which are not unrelated. Mario Draghi said that the ECB will not save a country from bankruptcy. This is not new, but it coincides with peripheral bonds already having reached a bottom and his words push these yields higher. This could be part of the reason for the slide of EUR/USD.
No big news came out of the US. The big movers are not on in the Atlantic, but rather in the Pacific: AUD/USD broke critical support to a near three year low, NZD/USD followed to a one year low, and USD/JPY was pressured on lack of action from the BOJ.
For more, see the EURUSD forecast.
