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This week’s data calendar contains plenty of minor indicator updates from both the US and the Euro Zone, nothing however that contains the potential to alter the current direction of the EUR/USD pair.
Market momentum has been persistently bearish since the single currency’s failed attempt to take out the key 1.37 level at the beginning of this month. There was a certain inevitability when the 1.3520 support level gave way earlier today and the momentum behind the move was such that the pair didn’t even attempt a pause at 1.35.
EUR/USD is now in territory that has not been seen for some time, anything short of the daily chart offers nothing in the way of support, even the daily chart itself could only provide a support line around the 1.3488. The strength of this 1.3488 level however only really becomes apparent at the weekly level view. Regardless, the current move took this support out with ease. This leaves only the 200 day EMA, around 1.3435, to challenge the current move down.
Over the past two years 1.34 has on a couple of occasions slowed a move in this currency pair, and it may be able to offer a soft landing to the EUR/USD on this move but this is more based on round number psychology than any firm technical factor. The same can be said about 1.33, just above this figure there exists some long term support that may hold in the absence of anything else however the most likely stopping point for this phase is just north of 1.3250.
It appears that the sharp and unexpected fall in the Euro Zone industrial production numbers last week was the last straw for the single currency. Markets are now growing impatient with the European Central Bank’s wait and see tactics. Ironically, it may prove to be that this overdue depreciation in the Euro is the catalyst required to spark something into this languishing Euro Zone recovery.
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
