The EURUSD is up 160 pips so far this week after catching a bid at trend line support that extends from the current 2017 low. This is a level we discussed over the weekend as one that needed to break down for sellers to gain momentum.
From a technical standpoint, the price action is playing out in textbook fashion. Tuesday’s rally put the single currency above the 1.0710 area which has acted as a pivot since March of 2015.
Then we saw some consolidation yesterday, but buyers appear to have held prices above new support at 1.0710. We won’t be able to confirm that until today’s close at 5 pm EST.
Another key level on the chart I shared over the weekend was 1.0775. The area has attracted selling pressure today which is what we’d expect. In fact, today’s high so far is 1.0776, just one pip above the horizontal level.
However, there is one thing that leaves me a little suspicious about today’s rally. The level I’ve had on my chart for quite some time is 1.0712, not 1.0710.
That may not sound like a material difference, but the price action just before yesterday’s close indicates that buyers lost the 1.0712 handle. Whether it’s a significant development or not will show in today’s closing price.
Either way, the first round of the French elections on April 23rd will likely keep me sidelined, at least for the remainder of this week. I don’t want to get caught on the wrong side of the market, particularly if the pair gaps at the open.
If buyers do manage to close the pair above 1.0775, the next key resistance comes in at 1.0825 followed by 1.0870.
Alternatively, if we see sellers take back the 1.0710 region, the next key support would come in at 1.0635. This area is actually a confluence of support due to the intersection of a horizontal level with trend line support from the current 2017 low.
A daily close below the 1.0635 area would expose 1.0520 followed by the multi-year lows at 1.0370.
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