by Nick Simpson, Forex-FX-4X
- Euro/dollar experienced a strong move back down towards the midpoint of the recent range on Wednesday after finding resistance at the 50% retrace of the last major leg lower from 1.3709 – 1.2744.
- This move lower came after price broke above the 16/4/13 1.3200 daily high, trapping fresh longs, and moved to the highest point seen since late February prior to the drop lower.
- The downside move has found support at an area comprised of the 200 SMA (simple moving average) and ascending trend line around 1.3040.
- Any continuation of the move lower has the 1.3000 handle round number area as a key focus heading into next week.
- The previous demand area low around 1.2950 is another technical area of interest with a 61.8% Fibonacci retrace level just 17 pips lower at 1.2933 - giving a technical confluence zone between 1.2933 – 1.2950.
- Any move to the upside brings the following potential near term resistance areas:
- the 1.3175 area previous resistance level
- the recent range high point around 1.3241 just above the 50% retrace at 1.3225
- the 61.8% Fibonacci retrace at 1.3340
- Our previous updates have noted that the USDX was trading near to the 16/4/13 swing low around 81.70, a prominent technical area which previously gave support for the USDX. This has once again proved to be a key pivot for the US dollar index.
- We note that the latest COT report update has the EUR net short position at -30K versus the previous -35K reading. This shows that large speculators had cut their net euro position. Long dollar positioning was relatively steady at $24.49 billion versus $24.94 billion for the prior week.
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