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CURRENCY ANALYSIS

Majors report EUR/USD

In the Euro/Dollar trend, since the introduction of Euro in January 1999, we can notice, as a whole, 3 different macro-phases: 
 

Phase I (Jan 1999-Apr 2002): fall, consolidation and re-accumulation.

After being exchanged in the 1.1800-1.9000 area, just after the start of transactions in January 1999, the pair EurUsd fell to a historical low at 0.8231 on October 26th, 2000. From that level, there was the developing of an accumulation phase, that went on until April 2002.
 

Phase II (May 2002 – Jul 2008): euro-rally.

Since May 2002, we went through a long phase dominated by a strong euro – or, better to say, by a weak dollar – that brought the pair to a historical high at 1.6038 (+95% from the bottom) on July 15th, 2008. 

currency analysis EUR USD

 

Phase III (Aug 2008 – today): bounce and stabilization of the US Dollar.

Along with the worsening of the financial crisis, the US dollar has strengthened, touching a peak vs. euro on June 7th 2010 at 1.1876. Then the pair has been moving erratically, with a recovery towards 1.4940 in May 2011 and a fall reaching a bottom in July 2013 around 1.2040 due to the increasing tensions in the euro-area peripheral countries’ sovereign debt. Since August 2012 – along with a progressive cheering-up within the euro-zone and the concomitant further Fed’s quantitative easing – the euro has been rallying steadily, reaching the key resistance area 1.3870-1.4000 (high 1.3994 on May 8th 2014). The missed overcome of 1.4000 determines a fast correction of the euro, that is heading towards the key support at 1.3300. The technical outlook remains weak/sideways, with the pair trading between 1.3000-1.3100 and 1.3870-1.4000. 

The present correction is heading towards  the key support at 1.3300. A signal of weakness for the coming weeks would only be triggered by a break below 1.3300 and the selling pressure would resume only below the strong support area 1.3000-1.3100 (premature), with a confirmation below 1.2930. The outlook would improve in case of a fast recovery above 1.3870 (premature), but a bullish signal for the coming months would only be triggered above 1.4000 (not very likely).

 

TREND

SUPPORTS

SPOT PRICE

RESISTANCES

Trend 3-6 months

down

S1

1.3500+

1.3634

R3

1.4200

Trend 6-12 months

side/down

S2

1.3300+

R2

1.4000++

Trend 12-18 months

side

S3

1.3000-1.3100++

R1

1.3870+

Maurizio Milano