Good day my forex friends! Back in July 8, I asked if the euro’s rise against the greenback would be short lived since it was, at that time, approaching a significant resistance at the EURUSD‘s long term downtrend line (kindly see my previous entry here). Apparently, its breakout from an inverted head and shoulders has propelled it now even past the long term downtrend line. While I am not really convinced that the pair would reverse its course over the long term and start an uptrend already, its breakout from a shorter term inverted head and shoulders and its recent move above the mentioned resistance add to signs that it could. A successful break of this resistance could be like the breaking of the Berlin Wall. But in this case, it would represent the euro’s probable back to rise.
Technically, the pair could move sideways for awhile or even fall since the stochastics are already in the overbought region. Though, it could now use the neckline of the inverted head and shoulders and the downtrend line as supports to keep it from falling any further. Having said that, its next stage would probably be at 1.3250. A break of the mentioned supports, however, could send it back to the bottom of the shoulders.
To euro, alongside the other higher yielding assets, could gain some further support if the earnings reports of Google, JPMorgan and Chase, Bank of America, and Citigroup, post some stellar numbers. Buying interest could also rise if the US’s initial jobless claims, Philly Fed Manufacturing Index, inflation figures (PPI and CPI), and the UoM Consumer Sentiment log some upbeat figures. Stay tune for these releases!