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Last week saw the non-farm payrolls come in particularly strong, catching most of the market by surprise. The really strong US figures saw EUR/USD instantly drop, but within less than an hour it had almost made up the lost ground and ended up closing the day broadly flat. This show of resilience might be a precursor to the coming days as, for the third time, EUR/USD is trying to break the $1.37-$1.39 range that it has found itself in.
The figures on Friday could have easily been used as an excuse for the currency cross to once again drift back down to the lower end of the range. The move in the last 24-hours has also seen the ten-day relative strength index move into overbought territory.
The more frequently a level is tested the more likely that it will eventually break, and the bulls will be looking for a sizeable move to the upside when this is finally achieved. The next level above is the October 2011 high of $1.42, but doing this will not be easy.
If today’s EUR/USD move ends with the currency cross closing below the $1.39 level, then we would envisage the price once again falling towards the lower end of the range. However, if it manages to close above then this could be the catalyst for higher moves.