Yesterday’s price action saw the currency cross break through the 50- and 100-day moving averages, and it now looks like it may build on this momentum.
Today the European Union posted its flash quarterly GDP figures, which have shown that the region is continuing to make economic progress. This coincides with the EUR/USD creeping higher over the last two weeks, when there has been a general absence of negative news flow out of the EU.
During this time we have also seen Federal Reserve chair Janet Yellen conduct her first speech in front of Congress, where she outlined the Federal Open Market Committee’s decision to continue along the path of tapering the US debt-purchasing scheme. It is hard to believe anyone did not see this coming, as it had been signposted for many months, and as such it should not have affected the market’s perception of US dollar strength.
Once again the 1.3700 level looks to be causing trouble; without a strong move through this level, and preferably a close above it, questions will continue to be asked about the pair’s ability to continue in this direction. Considering that the US is closed for President’s Day on Monday, when equity traders though not currency houses will be closed, a touch more caution should be exercised.