Propelled higher by stops and weak U.S. data the euro came within a few points of its seven month high of 1.3569, set on September 19th. Except for a brief seven day surge in late January and early February this year the euro has not been at this level against the dollar in almost two years.
The primary move was the vault of resistance at 1.3520 in a limited stop run just before the New York open that took the united currency to 1.3538, breaking Wednesday's and Thursday’s highs of 1.3537 and 1.3532.
With that out of the way the euro stayed bid, largely above 1.3540 until the release of the University of Michigan consumer sentiment numbers at 10:00 am. The final September reading was a bit light at 77.5 on a forecast for 78.0 and continued the drop from the July post-recession peak of 85.1.
The details of the report were weaker also. Consumers’ assessment of their current situation came in at 92.6 down from 95.2 in August and July's post-recession high of 98.6.Their expectations for the situation in six months dropped to 67.8 in September from 73.7 in August. It was the lowest reading of the future since the same score in April. The post-recession peak was 79.0 last October.
The next euro resistance levels are likely to be the centered on the seven sessions from January 30th to February 7th which was the last time, prior to the current surge that the euro was above 1.3500. Weak resistance will be at 1.3578 the top on February 7th backed up by substantial selling above 1.3600, the effective top on January 30th and 31st (1.3587, 1.3594) and February 4th and 5th (1.3598, 1.3596).Immediate support is at 1.3520
The euro traded above 1.3600 only twice on February 1st and 2nd and that brief foray probably did not set any important levels beyond the 1.3711 top on the 1st. Prior to the January -February run, the euro had not been above 1.3600 since mid-November 2011.
Immediate support is at 1.3520 and 1.3450.
Chief Market Strategist