This is helping the EURUSD and has led to a break out to the upside. The price is now above the 1.3691 level (high from February 23rd) and paves the way for additional gains for the pair. Support now comes in at 1.3691 with the next upside target at 1.3737 and the two week high at 1.3788.
Longer term the pair has the potential to work its way toward the 38.2% retracement of the move down from the January 2010 high of 1.4579 to the low reached yesterday at 1.3437. This level comes in at 1.3873. See the chart below.
We have been in a non trending range for 2 weeks. We have been looking for the break higher or lower and the market has chosen the upside. It also is in the direction of what the fundamental perspective has been pointing toward (i.e. WSJ article saying EURUSD was going to parity at 1.0000). The price is breaking higher. There is likely to be sellers on rallies which often feed the short covering. The risk is a break below the 1.3691 level.
