EUR/USD: correction is possible

Current trend

The European currency continued to strengthen against USD in the framework of upward correction. Yesterday the pair EUR/USD managed to break through the local maximum of 1.1450 and move up to new levels.

The main catalysts for the growth of EUR are trading tendencies. Recent Eurozone statistics indicates the restoration of the economy which may lead to the tightening of monetary policy in the future. In view of this the investors’ interest to euro is growing rapidly. An additional catalyst is positive data on retail sales and key indexes in the Eurozone.

On the other hand, dollar lacks investors’ attention and therefore decreases against the majors.

Today after slight correction the pair EUR/USD went up again in view of positive data on Eurozone industrial output. In the end of the trading week special attention should be paid to labor market data, inflation, and retail sales from the USA that may determine further short-term dynamics for the pair.

Support and resistance

By now the trading instrument has consolidated above earlier maximums and has additional space to move up. The most likely scenario for the near future is the continuation of the rate’s growth to key resistance levels and local maximums of recent years: 1.1550, 1.1600, 1.1715. On the other hand, the transfer to consolidation and correction stages is possible. In the medium term the main scenario may be wide consolidation within the range of 1.1600-1.1385.

Technical indicators continue to show a buy signal: MACD keeps a high volume of long positions, and Bollinger Bands are directed upwards.

Support levels: 1.1450, 1.1385, 1.1350, 1.1280, 1.1260, 1.1200, 1.1155, 1.1050, 1.1020.

Resistance levels: 1.1550, 1.1600, 1.1715, 1.1750, 1.1800.

Trading tips

Long positions may be opened from the current level with targets at 1.1600 and stop-loss at 1.1360. After these levels are reached, the rate is likely to turn, and downward movement may form.