EURUSD: Euro steadies after Friday’s selloff: by FX Charts

After initial dip to 1.0822 in early Asian trade the Euro stabilised and recovered mildly, to a high of 1.0905 against dollar, as the ECB commenced its quantitative easing program by purchasing German, Italian, French and Belgian bonds. Elsewhere today, the EU Sentix investor confidence climbed to a 7 year high of 18.6 in March, better than expectation of 15.0 and provided some support for the Euro.Technically there is very little change, although today’s action has allowed the shorter term charts the chance to unwind their oversold condition following Friday’s steep fall.

1.0900, will again act as decent resistance, although the 4 hour charts do point to the chance of a further recovery and given that the market is very short we could see a profit-taking bounce towards the first Fibo resistance at 1.0952(23.6% of 1.1378/1.0822). Above here there is minor resistance at 1.0985 followed by the 100 HMA at 1.1010 and then the next Fibo resistance at 1.1033 (38.2% of 1.1378/1.0822).

Below today’s 1.0822 low, would suggest a run to the base of the long term channel at 1.0800 and then to the shorter term channel (below – brown) at around 1.0750, which fits in nicely with the important Sept 2003 low at 1.0759, and may well be a suitable place to trim back some risk in looking for a bounce in order to re-sell.  A break of 1.0750 would probably negate the chance of a bounce and would then open up the chance of a run to around 1.0550, where a support line connecting the Oct 2008/June 2010 lows currently sits (monthly chart below). Below this sits the base of the multi-year channel, currently at around 1.0250 which will again be strong support, but once there, the Euro will inevitably want to take a look at parity.

Given the comparative lack of data today, another day of hovering in the 1.08/1.09 region would not really surprise, although the Chinese CPI, due in Asian trade, may cause a few ripples. Overall the theme of selling into strength remains the preferred plan, although any dips into the 1.0760/1.0800 should be well supported in the near term.

Economic data highlights will include:

US Wholesale Inventories.