EUR/USD reached $1.3966
By Elizaveta Belugina
EUR/USD rose today to $1.3966, the highest level since the end of October 2011. Euro reached 50% Fibo of the decline in 2008-2010 and is now above the trend line from 2008.
The single currency gained as policy makers signal support for the region’s recovery. Bundesbank President Jens Weidmann said today that low rates of the ECB can’t be permanent. The last time regulator cut its benchmark rate was in November fearing deflation. According to Weidmann, 2/3 of euro area inflation drop due to energy and food prices which tend to be very volatile. That means that the threat of deflation is not as high as it may seem when we look as the region’s price data. French CPI actually came out today above forecasts (+0.6% in February after -0.6% in January). That’s an argument for an eventual increase in rates, bullish for EUR.
Euro's momentum rose and the pair is testing levels above the daily uptrend channel, although it reached overbought area and we see MACD divergence at H4. Above $1.3966 we still see scope for a move to $1.4000. Support is at $1.3915 and $1.3832. Still, US retail sales are due at 12:30 GMT. A good reading will bring back dollar bulls, especially as EUR/USD is now trading at important resistance of $1.3950.
Chart. H4 EUR/USD
To contact the writer of this story: Elizaveta Belugina, firstname.lastname@example.org