As we largely anticipated in our previous report, EURUSD
continued to move inside the upward channed easily visible
on the daily charts, then broke above its upper trendline
to establish new highs at 1.2630. EUR longs accumulated to
record values last week, and are now supporting a strong uptrend
in the pair. Monday's movements may be abrupt given thin trading
conditions due to holidays. As key fundamental data for next
week we have U.S. ISM, personal and construction spending
data on Monday, Fed's Bernanke speaking on Wednesday, and
an ECB meeting on Thursday. On Friday, all traders will focus
on the U.S. April Non Farm Payrolls, expected to show a 200k
gain.
Technically, we saw the pair failing to find resistance at
1.2590 (last year's August and September highs) and the daily
and weekly close at 1.2630 could signal that we are on the
way to 1.30. Resistance is now seen at 1.2650 and we expect
it to limit EUR gains at least in the beginning of next week.
On the downside 1.26 is the first barrier, followed by 1.2555.
If reached, the 1.25 level will probably act as strong support
(61.8 % of the 1.2365 - 1.2650 recent wave). Some profit taking
after Friday's steep rally (and before NFP) could suggest
a small retracement in favor of the dollar, but it will probably
be short-lived, as traders look to re-establish longs lower
in the 1.25 area. 4h MACD is bullish on both hourly and daily
studies, RSI above 75. Next important mid-term target for
the pair is now 1.2775.
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