Strong rising channel extends back to mid-July and is defined by recent highs on October 24 and 25. The descending euro broke through the minor upward trend line at 1.3650 last Thursday October 31st and stopped at 1.3575 support. Descent continued on Friday November 1st halting at 1.3480 well short of support at 1.3430. The lower limit of the July-October channel is currently at 1.3439.
Today's low at 1.3442 just touched the lower limit and then reversed back into the channel and above 1.3500. Though the channel limit is at 1.3439, it is backstopped by support at 1.3430 and more substantial support at 1.3400. The channel cannot be considered broken until both of those support lines are conclusively cracked. Either could act as a spring board back into the upward channel.
The ECB rate announcement and particularly the Draghi news conference that follows on Thursday will be important if not decisive to the immediate direction of the euro. If President Draghi does not make some accommodation, even if just rhetorically, to disinflation and economic stagnation the euro could return to the main body of the upward channel.
Resistance: 1.3575, 1.3650
Support: 1.3430, 1.3400, 1.3330, 1.3300
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