Following ECB’s decision to keep rates flat, Draghi went to the press conference claiming that Eurozone is on the road to recovery in 2013. According to him, “positive contagion” is pulling Eurozone out of the crisis, and significant improvements in market conditions will be seen via a “medium-term perspective”. Whether Draghi’s words can be believed doesn’t change the fact that ECB will most likely not cut rate anytime soon, sending EUR/USD higher. Currently we’re trading back into the Dec ’12 range sitting above 1.315. Default settings Stochastic indicator also hint at a bullish reversal with readings moving back from Oversold region.
15 Minutes Chart
Interestingly, the same Stochastic indicator reading is also moving out from the Oversold region, implying that 1.3250 could potentially hold within the short-term. Why this is important is because EUR/USD has just seen the largest daily rally in 4 months, and common knowledge tells us that what goes up, must come down (eventually). With short-term support holding and technical indicators showing a healthy bullish bias, it seems that “eventually” may not be coming so soon, which is certainly good news for bulls. As we trade into the final few hours this week, bulls will be glad that we’ve made significant strides, crossing back to the bullish side of the 50% Fib and Multiweek rising trendline holding.
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