EUR/USD Chooses To Correct After 3 Days Higher

The EUR/USD is weakening a bit as the 8:30 data did not satisfy from a growth standpoint.  When the US data is not as strong as expectations this has led to a decline in the EUR/USD as flight into the dollar leads the way.

Overnight the Eurozone PMI data did come out stronger than expectations with the Manufacturing component reaching 40.5 - the highest level since October 2008 - and the service sector PMI coming in at 44.7, also the highest reading since October.   This should have benefitted the pair.  However,  after a sharp move higher to the highs of the day at the 1.3838 level, the price moved sideways between 1.3807 and 1.3755.

Currently, the pair has just reached a new low of the day at 1.3728.  There is overhead intraday resistance at the 1.3780 level where the 100 and 200 bar moving average on the 5 minute chart is located.  The price action today has taken the price above and below this moving average a number of times indicating a neutral bias (see chart above).  This is normal - especially after the sharp move higher in the EUR/USD over the last three trading days (price moved from 1.3428 to a high of 1.3838).  However, it is also normal to move away from the shorter term moving averages at some point.  The downside seems to be the direction of choice - at least for now.

The initial target on the downside is the 1.3722 level which corresponds to the high from May 13th.  Below that level is the 38.2% retracement of the move higher over the last 3 days.  That level comes in at the 1.3680 level.  Below the levels is the 50% corrective level at the 1.3631 level and the 100 and 200 hour moving averages which are both at the 1.3611 level currently, and moving higher.  The chart below shows the target technical levels.

Subscribe by RSS Subscribe by Email