Euro Resilience To Catch The Eye?
Traders will make their own judgements but some analysts, looking at the short-term price action in the EURUSD spot, were of the opinion on Thursday that the pair’s rally was likely to take a pause ahead of next Thursday’s ECB Meeting. The argument was made that with the EURUSD rally having previously gathered pace after barrier options at 1.2100 had been taken out, helping the pair reach 1.2323 on Wednesday, that traders had been tempted to scale back their exposure. From a technical viewpoint some analysts have argued a key day reversal (KDR), suggestive that a top had been made, occurred on Wednesday when after the EURUSD hit 1.2323, it traded down to 1.2185 below Tuesday’s 1.2196 low.
Perhaps that will prove to be the case. But traders cannot fail to have noticed how the euro bounced higher again on Thursday, and not just against the US dollar. EURJPY also retraced higher after Wednesday’s move lower. It might be unquantifiable but the euro’s apparent resilience might just be giving traders food for thought, KDR or no KDR.
Written by Neal Kimberley, External Currency Analyst.