Yesterday’s gunfire incident in Ukraine emphasised the worries traders have over the Ukraine/Russia standoff and how easily it could escalate. At present, the EU members that are partially dependent on an energy supply from Russia via Ukraine have managed to avoid some tough decisions as far as sanctions are concerned.
At the same time as this unrest in the east is occurring, pressure is continuing to mount on European Central Bank president Mario Draghi over the EU’s inability to tackle the continued low inflation rate. His comments that the ECB would not be ending the so-called sterilisation of the current bond-purchasing programme saw the EUR/USD hit highs of 1.3915 last seen in 2011.
The current moves would suggest that EUR/USD could continue heading towards the 1.4000 level and possibly even further. Only a break below the 1.3830 level would cause us to question this upwards momentum.
As Chris Beauchamp stated yesterday, it is the previous resistance at $1.3825-$1.3832 that has now become the support.