If we ignore the kneejerk suffered on Thursday, the EUR had another great week, closing up for sixth consecutive week in a row, near its fresh 2 year high of 1.3966. Missing 1.4000 by a few, the technical picture is clearly bullish, with price developing inside an ascendant channel clear in the daily chart, and having been contained above its middle line. Technical indicators hold above their midlines, lacking momentum and even diverging slightly lower, but still far from signaling a top has come to place and the road is now south. Indeed, the 6 week in a row advance is something that may favor some downward corrections next week, moreover with the FED monetary policy decision and Janet Yellen’s debut in the chair. But if anything, will be more a correction than a reversal sign, as price needs to break at least below the base of the channel, currently around 1.3730/50, to suggest the run is over.
In the meantime, the main downward risk for the pair is the annexation of Crimea by Russia after next Sunday referendum, which is largely expected to favor the invading country. Is not the result which is a risk, as market has priced in most of it, but the upcoming sanctions that the US and Europe had announced they will impose afterwards. But for now, the EUR has remained pretty immune to risk off rallies, and until market proves me wrong, I would expect the downside to remain limited by buyers surging on dips.
Technical immediate support for the upcoming week stand at 1.3840, post Draghi low, followed by 1.3770 static price zone. As mentioned before, risk will turn south with a break below 1.3730, base of the channel quite unlikely for now. Closing the week above 1.3900 should continue to encourage buyers, with 1.3960 and 1.4000 as next key levels to break. If the pair reaches next Friday above 1.4000, doors are open for a continued rally towards key 1.4250 price zone.
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