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By Stuart McPhee

EUR/USD for Friday, May 2, 2014

In the last 24 hours we have seen the Euro move up and test the resistance around 1.39 again only to be rejected. After moving very little, in the last few days the Euro has finally shown some life as it has moved quickly back and forth between the two present key levels of 1.38 and 1.39. The 1.38 level over the last few weeks has reinforced itself as one of significance after providing stiff resistance on numerous occasions and now providing some support which has created the latest trading range. Over the last few weeks it has eased back from the resistance level at 1.39 and it seems content to maintain a trading range between 1.38 and 1.39. For the last couple of months now the Euro has spent all of its time between two key levels of 1.37 and 1.39 with a two year high above 1.3960 being achieved in that time.

Prior to the current trading range, throughout the first half of February the Euro enjoyed a solid move higher moving from support around 1.35 up to test the key level at 1.37. It was able to move through the 1.37 level before consolidating and spending several weeks resting on support at that level. To finish out January the Euro continued its decline and moved to a two month low touching below the support level at 1.35. With the current trading range considered, the 1.3550 level seems a distant memory however it will most likely play a role should the Euro drift lower and fall through the support at 1.37. With its present price action considered, a return back to the 1.37 level in the immediate future is likely.

November last year was a good turning point for the Euro as it reversed well after the strong fall from the key 1.38 level, traded to the Euro did well to bounce strongly off support at 1.34 and recover the lost ground from the previous couple of days which saw it fall from the resistance level around 1.3550. This was after a few weeks which saw it move steadily higher from a support level at 1.33 back up to a three week high just above 1.3550. Over the last few months 1.3550 has been a key level.

Ukraine, struggling with a stuttering economy as well as an escalating crisis with neighboring Russia, has had its $17 billion International Monetary Fund bailout signed off. But international lenders are already warning of threats to its funding. Christine Lagarde, IMF managing director, warned “further escalation of tensions with Russia and unrest in the east of the country pose a substantial risk to the economic outlook.” The detention of Russia’s military attaché to Kiev by Ukrainian police on Thursday morning highlighted concerns that the tensions gripping the country are unlikely to go away.

(Daily chart / 4 hourly chart below)

EUR/USD May 2 at 00:05 GMT 1.3868 H:1.3889 L: 1.3862

EUR/USD Technical

S3S2S1R1R2R3
1.38001.37001.35501.38801.3900

During the early hours of the Asian trading session on Friday, the Euro is consolidating and trading within a narrow range just under the resistance level at 1.3880 after surging higher from below 1.3800 over the last couple of days or so. Current range: just below 1.3880 around 1.3870.

Further levels in both directions:

• Below: 1.3800, 1.3700 and 1.3550.

• Above: 1.3880 and 1.3900.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for the EUR/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The EUR/USD long position ratio has fallen heavily back down below 30% as the Euro has rallied higher back up towards 1.39 again. The trader sentiment remains heavily in favour of short positions.

Economic Releases

  • 23:30 (Thu) JP Unemployment (Mar)
  • 01:30 AU Building approvals (Mar)
  • 01:30 AU PPI (Q1)
  • 08:00 EU Manufacturing PMI (Apr)
  • 08:30 UK CIPS/Markit Construction PMI (Apr)
  • 09:00 EU Unemployment (Mar)
  • 12:30 US Non-farm Payrolls (Apr)
  • 12:30 US Private Payrolls (Apr)
  • 12:30 US Unemployment (Apr)
  • 14:00 US Factory Orders (Mar)

*All release times are GMT

Source: EUR/USD - Steadies Below Resistance At 1.3880