EUR/USD has finally broken the 1.34 resistance with its 3rd attempt since 2013, currently trading around 1.345 with 1.35 providing overhead resistance. The move towards 1.34 was matched with AUD/USD fall from 1.05, resulting in EUR/AUD pulling from 1.26 to above 1.29 by the end of last week.
Currently price is trading back below 1.29, after briefly touching 1.295 and entering back into the Kumo. 1.29 may yet provide strong resistance against any recovery rally as it is the confluence with Senkou Span A (Upper Kumo), pushing price back further deeper in the kumo. It is also important to note that both Senkou Span A and B are moving horizontally, giving us a potential for a bearish Kumo Twist soon. When that happens, it easy to imagine price trading below the current Kumo to give us a bearish signal, potentially heading back towards 1.26.
Weekly chart shows the same bias, with 1.29 not convincingly broken. Stochastic is also entering into the Overbought region towards the same level as the past 2 peaks. Nonetheless, there is no evidence that bullish momentum has faded. Hence it is still early to tell whether price could eventually push towards 1.39, or falter back to 1.19 with 1.24 providing support.
From a fundamental perspective, Euro-Zone is lacking good news within its continent. We’ve heard the usual about recovery in 2013, growth in 2014 from the various big wigs but no substantial plans regarding solving Greece, Spain, Italy and the peripheral countries for good. Interestingly, news wires has been relatively quiet regarding these countries, which may come back to bite EUR in the foot when markets starts to pay notice to the yet unresolved crisis.
On the AUD front, RBA rates cut continue to loom. Mining industry which has contributed to much of AUD gain is also expected to peak in 2013 if not already been so in 2012. As such, a bright outlook for Australia’s economy is hard to peddle especially when previous month’s Employment data was surprisingly negative. With both RBA decision and Employment data coming next Tues dan Thus respectively, that could be the main catalyst that could push price clean beyond 1.29 or below 1.29 without doubt.
Though USD news is certainly noteworthy, e.g. NFP and FOMC Meeting, they could potentially add noise to the setup without providing any further clarity in direction.
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