EURO at 50% Recovery since 2014 Fall
|EUR and pound may have weakened against the dollar, but news that German Chancellor Merkel reached a deal with the Social Democrats on coalition talks has lifted sentiment and helped Eurozone markets in particular to shrug off the prospect of reduced ECB support going forward. The news provided a buying catalyst in a market that is bullish for the euro, with recent data having on net reaffirmed the picture of accelerating growth momentum and the ECB minutes having yesterday affirmed that the central bank is course to end its asset purchase program.
The common currency presently showing a 0.8% gain in the dollar, which is the weakness currency on the day so far, and a 0.6% advance on the yen and a 0.2% gain versus sterling. EURUSD smashed through the 2017 high at 1.2092 on route to logging a 37-month peak at 1.2136. This is now the fourth consecutive week that the pair has posted a higher high from the previous week. The euro broke and closed above both the 20- and 50-day moving averages yesterday, too. The December 2014 high at 1.2569 provides a long term upside target. Trend support is at 1.2028-30.
However in a shorter timeframe, a possible target could be seen in the next resistance area at 1.2170, which is also the 50% Fibonacci level since 2014 peak , in May 8, with teh pair holding for 4 consecutive hours above 1.2110.
This area is halfway recovery since the drift seen in 2014, for euro. A break and hold of the EURUSD above this strong resistance area at 50% Fib. level , could be extremenly significant for the pair, since it will open the way towards new levels seen prior 2014.
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