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Euro Support /Resistance Trade Analysis

Posted by Joseph Trevisani on Sep 12, 2013 3:19:00 PM

Until the results of the FOMC meeting are known on September 18th the bias in euro is to buy on dips with the preference to purchase the united currency below 1.3300.  

1.3370        Fibonacci- 76.4% retracement of the 1.3452-1.3105 drop

1.3350       Offers, August 29th high 1.3343

1.3330       Stops

1.3325       High Wednesday and Thursday, September 11th & 12th

1.3320       Moderate offers

1.3319       Fibbonacci-61.8% retracement of 1.3452-1.3105 drop


1.3299      Market bid 6:30 pm EDT


1.3280     Moderate buying

1.3278     50% retracement of 1.3452-1.3105 drop

1.3250     Strong buying demand

1.3244     Low September 11th

1.3238     Fibbonacci-38.2% of 1.3452-1.3105 drop

1.3230     Low September 10th

1.3200    Moderate demand

1.3154    200 day moving average

1.3150    Strong demand, 100-day moving average


While waiting for the Fed decision on the 18th expect constricting ranges as traders will be reluctant to speculate on Fed policy and its effect on the dollar.  A small, largely symbolic reduction in QE is probably priced into the euro level but with the disappointing payroll report for August even the odds on that have diminished. 

A postponement of the QE taper will provide a lift for the euro. Although, unless it is accompanied by language that undermines the assumption that the next Fed policy move is the beginning of the end of QE, the euro is unlikely to go very far. It should be restrained by the twin facts of a US economy far stronger than Europe’s and that the end of QE and the widening of the EMU- US rate differential is still the assumed Fed policy.


Chart: Bloomberg

ScreenHunter 1788 Sep. 12 19.09


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