Sometimes the questions are complicated and the answers are simple. ~ Dr. Seuss
Good morning. The euro is consolidating gains near $1.3500 ahead of ECB cash injection of 500 billion euros according to expectations. Other important events on today’s economic calendar are the US GDP data and Bernanke’s testimony. Let’s see what are some of the charts worth keeping an eye on
Support around 78 is now under heavy pressure as the dollar continues to trade lower, while EURUSD maintains altitude near $1.3500 ahead of LTRO 2.0
Euro found support around 1.3380/00 so the entire recovery resumed on February 16 is intact. Today’s ECB action should push it above 1.3500 but it depends on the total funds injected, as a 500 billion figure is likely priced in already so it’s best to wait and see. Wondering what’s above $1.35? well, not much until $1.40
The potential breakout is more obvious on the daily chart as this is the 3rd daily attempt to break higher. Last decline was short-lived. One plan to consider is buying on the break above 1.3500 in the next sessions
As noted on Monday, cable joined the breakout watchlist as it approached 1.5900. Now it is trading higher and I think there’s more room for recovery
Buying silver was (and still is) one of the best bets. As seen below, since the recovery started on December 29, all corrections were short-lived, so it was best to either buy dips or on strength/breakouts. I don’t think that the recovery has come to an end, hence I remain bullish, expecting a new breakout – above 62% fib
I was expecting 1.2500 to provide support after the break but I was wrong, the sell-off was just too strong.
Minor support around 1.2420 is still intact at time of writing but it’s probably a good idea to consider buying opportunities only higher – if EUR returns above 1.25
Aussie dollar is another pair on the breakout watchlist as current top is under pressure and a re-test of 1.100 might be just around the corner.
Have a great day!