EURUSD (week: 6-10 March, 2006)

Last week, EURUSD reached higher above 1.20 on hawkish comments from ECB's President Trichet pointing to inflation signs in the Eurozone and consequently higher interest rates in the near future. The pair closed the week significantly higher and looks ready to defend its latest gains this week as well. Last Friday, USD buying (that could have turned into a possible greenback rally) found strong resistance in the 1.20 area, which is now the first major support level, backed by 1.1980. On the upside, an imminent break of 1.2050 will take the pair to 1.2070 first, then probably higher above 1.21. Bids are expected around 1.2130 (61.8% of 1.2325 - 1.1825) and higher at 1.2175. RSI and MACD are bullish on hourly and daily studies, momentum positive. We expect the pair to stay inside 1.1980 - 1.2125 range at least until the end of the week, however a sustained break of 1.1980 could alter this bullish picture and favor a new test down at 1.1825.


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