Calling all euro bulls! The EURUSD pair or the “fiber” as what some people call it has just broken out from a symmetrical triangle. As you can see from its daily chart of this forex pick of mine, the pair has actually reversed its downtrend when it escaped from a cup and handle pattern. It then continued to trade strong before consolidating into a symmetrical triangle for the last two weeks. Given this recent price action, though, I can say that buying the euro and selling the US dollar at the same time would be a better idea at least from a technical point of view. Such breakout could propel the pair up until it hits some resistance at 1.4250 or even at 1.4300. That’s at least a 200-pip upside in the near term. Not bad! On a different perspective, you might want to chance upon my colleague’s target price in his post.

The remaining days of this week would be crucial for the EURUSD. A high degree of volatility is expected in all currency pairs especially the fiber because of the US Federal monetary policy decision tomorrow and the release of the US’s non-farm payrolls (NFP) report on Friday. There has been talks that the Fed would engage into another non-traditional money printing activities (quantitative easing) in the days to come in its desire to further ease the day-to-day market interest rates in order to encourage more lending and spending. Puff Daddy predicted it correctly – “More money, more problems.” Of course the problem here is reflected on the greenback as its valuation gets diluted by the increase in money supply. Friday’s NFP will likewise create some noise. Based on the recent estimates, about 65,000 jobs were added by US firms in the last month as against the 95,000 that got laid off in the previous period. If this figure is correct, then such would spark optimism among market participants, causing them to continue supporting non-dollar currencies like the euro.

Good day Forex friends! Last October 7, I mentioned in my post (kindly see it here) the the euro has still a lot of room to move up against the US dollar. Zooming closer to its, 4-hour chart, you will see that the EURUSD pair has been trading in a very well defined rising channel. Given the pair’s present trend and the channel’s degree of ascent (45 degrees), I’d say that the euro rise at least in the near term could be easily sustained. Furthermore, another bullish sign propped out of the pair’s charts when it gapped up to open the this week. A bullish gap is an occurrence when the opening price opens much higher than the high of the previous period. Obvious, this is a positive sign as this suggests a rapid demand for the security which in this case is the euro. So as long as the support of the rising channel or the uptrend line holds, the EURUSD or the fiber would most likely conntinue its move north. In case it weakens, the channel’s support and the bottom of the channel could keep it from falling further.

For this week, no material economic data will be reported from the euro zone. Given the lack of economic flow, the EURUSD may just resume its present trend. Then again, it’s also possible for the pair to retrace a bit as investors lock in some of their profits.