In the weekly EURUSD forecast we mentioned that the pair is trading in two downtrend channels. The recent dollar weakness not only helped it escape from downtrend support, but also break out out of two downtrend resistance lines.
If this break is confirmed, the second downtrend line could be challenged soon. However, this is already a longer running line, and €/$ might find it harder to break above.
Here is the updated daily chart:
The second resistance line currently stands at 1.3821 and the broken, lower one at 1.3790. This is a narrow trading range. Further resistance appears in the veteran 1.3830 line followed by the 2013 peak of 1.3894. Support awaits at 1.3740 followed by the round 1.37.
The 1.38 line, where the pair is currently floating around, serves as a pivotal line within the range.
The dollar is on the back foot across the board throughout the day. The better than expected JOLTS figure, which was the best since 2007, did not really help the greenback.
Good news is coming from other places as well. In the euro-zone, it seems that the ECB is not that eager to enact QE and that any such program could certainly have a limited effect.
We can expect ECB members to try talking down the euro, as we’ve seen in the recent past when it approached the “line in the sand†of 1.40.
