The last month has seen EUR/USD add over 550 pips as it has charged from its short sojourn south of 1.2800. The two times that the currency cross has half-heartedly tried to break below 1.2800 we have seen strong buying come in and send it back on its way higher. Once again this level has seen the buyers come back and a fresh attack of the mid-June highs looks likely.
With so many countries coming out with trade balance figures this was always likely to be a week when we saw one or two currency crosses behave abnormally, and this morning’s better-than-expected German trade balance figures have only added to the momentum in the EUR/USD currency cross. Arguably the fresh speculation at the beginning of the week over an earlier-than-expected end to US quantitative easing might have been the catalyst. As we are now well into the holiday season in Europe and the majority of politicians are away from the glare of the public eye, and therefore much less likely to make controversial statements, the euro has been able to gain a little traction.
We should bear in mind, however, that it is of course one thing to get to and test highs; it is quite another to show the enthusiasm to break through them.