The euro rose higher against the greenback as regional finance ministers meet in an attempt to unify a single resolution for troubled European banks. The eurodollar rose to the strongest levels in nearly six weeks on mixed data. Italy reported an expansion of industrial output, while, supposedly one of the stronger nations, France reported a decline in industrial output.
The 4H chart shows the defined resistance level at 1.3800. The candle that broke through showed strong selling at the top of the range and brought price action back below 1.3800. The downward movement in the +DMI corresponds with the loss of momentum. A pullback to 1.3675 could be in order.
The daily chart confirms resistance, but price action is being supported on the price channel to which it recently broke out of. It is likely that the euro will retest 1.38 in order to test the waters for higher ground. A pullback to 1.3735, and then 1.3675 is supported by price action.
The euro has diverted from eurozone fundamentals and may be trying to force Draghi’s hand into action. Euro traders should also pay attention to Washington D.C. with the speculation on a budget deal. Less political strife should help support the dollar going forward and a euro pullback.
The Sterling reached two year highs against the dollar before falling into negative territory on a pullback. The Sterling seen positive reaction of UK house prices and industrial output that came inline with expectations at .4 percent. Traders remain bullish on traction gained by the UK economy, but it has to be noted that the UK is not out of the woods, yet.
“Sterling looks likely to continue to grind higher against the dollar, even if the dollar looks a little oversold,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce. Traders may look to push upward to 1.65.
The 4H chart is also showing lost momentum in the Sterling. After a push through 1.6464, the GBPUSD fall back and began to consolidate. A break through a consolidating range. A pullback to 1.6410 and potentially 1.6375-80.
The daily chart shows where price action support lies, while a breakout of the two year high could ride momentum to 1.6500.