Euro/dollar traded in a limited range as the markets received mixed news and still await a formal Spanish aid request. Spain will hold a closely watched bond auction that will serve as a barometer for the crisis. In addition, PMI figures will also get attention. Here is an outlook for the upcoming events and an updated technical analysis for EUR/USD.
The French economy managed to escape contraction, and Germany posted nice growth. On the other hand, an important German survey was rather depressing. Greece will easily meet the August 20th obligations using the revolving door trick by the ECB, but now faces firm German opposition for its requests for more money and more time.
* All times are GMT
EUR/USD Technical Analysis
€/$ started the week on low ground and then moved higher, but couldn’t break above the critical 1.24 level (mentioned last week). It then retreated and fell to just above 1.2250 before recovering.
Technical lines from top to bottom:
The very round 1.30 line is a very important line in case of huge rally. In addition to being a round number, it also served as strong support. 1.29 is also notable on the upside, followed by 1.2814.
1.2750 capped the pair after the Greek elections and also had a similar role in the past. It is now of higher importance. 1.2670 was a double bottom during January and was the high line of the recovery before the Greek elections in June. It also capped the pair at the beginning of July 2012.
1.2623 is the previous 2012 low and remains important despite recent battles over this line. Below, 1.2587 is a clear bottom on the weekly charts but is only a minor line now.
1.2520 had an important role in holding the pair during June, in more than one case, but it’s much weaker now. 1.2440 provided support for the pair at the same time. and worked as double bottom.
It is closely followed by 1.24 that provided some resistance in June 2010 and switched to resistance in July. It is now of higher importance after capping a recovery attempt at the end of July and also at the beginning of August. 1.2360 was temporary support in July 2012 but quickly switched to resistance. It is minor now.
Further below, 1.2330 is another historical line after being the trough following the global financial meltdown in 2008. It’s stronger after working as strong support. It should be closely watched if the pair falls. 1.2250 proved to be significant support for the pair in August 2012 and is key support now.
1.22 is now a more serious support line, after serving as such in June 2010. 1.2144 is already a very strong line on the downside: it was a clear separator two years ago, when Greece received its first bailout. Also in July and August 2012, it worked as a separator.
The new 2012 low of 1.2043 is the next line, although it may prove to be weak on a downfall. Next we have the 1.20 line, which is a round psychological figure.
The post crisis low of 1.1876 is the final frontier before lines last seen in the good years. The launch price of 1.17 is the next line.
Trading Above Uptrend Support
An uptrend support line can be seen on the graph. IT supports the pair since mid July and was challenged quite recently. The broken downtrend resistance remains on the graph. These lines are both bullish.
I turn from neutral to bullish on EUR/USD
Will we finally see a Spanish aid request? Two weeks have passed since Rajoy hinted about the move. Markets grew nervous and now optimistic once again. A formal request will boost the euro, that will forget the European economic squeeze and Greece, which is on the back burner until September. Without a Spanish request, the euro will likely drift in range and slide a bit.
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