The recent EURUSD breakout is being put to the test as I write this. Friday’s NFP-inspired close above 1.0635 was no doubt bullish, but I needed to see more from buyers to convince me that it was sustainable.
In fact, three things are preventing me from taking a bullish stance at the moment.
The pair is currently retesting the 1.0635 handle as new support. This is a level we’ve discussed for quite some time. It even served as a selling opportunity on the February 20th retest.
Although today’s session is far from over, there’s been an interesting development on the intraday charts. The latest 4-hour close put the single currency back below 1.0635.
Now, I’ll be the first to say that a daily close (5 pm EST) trumps a 4-hour close any day of the week. But if Friday’s breakout has any merit at all, we should see buyers flock to the 1.0635 area.
I don’t see a flurry of bids, at least not yet. Instead, I see a pair at risk of slipping back below the level. If this continues and the pair does indeed close today below 1.0635, we can label Friday’s move as a false break.
But as noted above, Wednesday’s Fed rate decision at 2 pm EST is more than enough to keep me sidelined. I certainly don’t want to take on USD exposure in front of such a heavy-hitting event.
Key resistance at the moment remains the 1.0680 area. A daily close below 1.0635 would re-expose support at 1.0520.
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