Fundamental and Technical Analysis EUR/USD 16 Apr 2013
While the attention of binary options traders was caught in precious metals, prices in the EUR/USD did move in a range of about 90 pips on Monday. That’s not a whole lot for the first trading day of the week, and the move was quite hard to predict for investors with no major news save for the tragic alleged terrorist plot at the Boston Marathon.
The Japanese yen hit two-week highs
Despite the excessive moves in the JPY crosses and the demise of commodities led by gold and silver the pair moved in a relatively tight range between 1.3020 and 1.3110 with the bottom of this range having been hit in late NY trading whilst the top was visited in early US opening. The Japanese yen hit two-week highs while commodity currencies led by AUD, NZD and CAD tumbled after disappointing Chinese data, a sharp fall in commodity prices led by gold and silver, and the aforementioned explosions in Boston.
In late Asian trading heavy EUR/JPY buying has influenced the pair with it now trading close to 1.3070 as of writing. Japanese trust banks are rumored to be behind the move pushing EUR/USD higher from an Asian session low around 1.3030. The risk sentiment triggering demand for EUR can also be attributed to the fact that the Nikkei Index underpinned demand for risk assets as commodities looked for levels to form a short term bottom.
Next resistance on the charts is around 1.3110 with yesterdays high at 1.3105 likely serving as a short term resistance. Key resistance on the daily charts suggests keeping a close eye on 1.3150 which is where the 100 day moving average is projecting these days. Most of the Asian session showed the pair trading in a tight range of about 25 pips, before 03 GMT when the heavy institutional players started pushing up the trading volume.
Whilst the main focus of binary options investors remains on the market of the JPY and on gold we expect some opportunities might arise in this trade. Economic data out of the Eurozone is providing a likely trigger for a substantial move. So we advise you to be cautious until 0900 GMT, when the German institute ZEW releases its sentiment projections for the month of April.
Economic sentiment is projected at 42.0 points, while the “current situation” data is expected to hit the wires around 12.0. Any substantial difference could be the next trigger for a decent move. Looking at the chart we expect the action to be determined between the two main trend lines shown on our chart. Main resistance around 1.3110 is our likely first target, with yesterdays high set in the US session likely to cap until the release of the ZEW data.
If that turns to be very glim expect a pullback towards 1.3020 with a break below 1.3010 to open a deeper move towards 1.2950-70. We advise caution for traders willing to sell the EUR/USD at all cost, cause of the price breaks above 1.3120 we could easily see some short covering by FX markets players to push the pair towards 1.3150.