NEWS / Macroeconomic Stories

Euro drops to trend line, but will it hold?

Daily Currency report for Wednesday August 23 2006

This is only a guide. Please refer to our specific entry signals for exact entries and stops.

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This Week's Economic Calendar
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Date ET Release For Actual Briefing.com Consensus Prior Revised From
Aug 23 10:00 Existing Home Sales Jul 6.60M 6.58M 6.62M
Aug 23 10:30 Crude Inventories 08/18 NA NA -1607K
Aug 24 08:30 Durable Orders Jul -1.0% 0.0% 2.9%
Aug 24 08:30 Initial Claims 08/19 310K NA 312K
Aug 24 10:00 New Home Sales Jul 1085K 1100K 1131K

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EUR/USD

Medium Term Trend: The euro has dropped back to support at 1.2780, postponing the next move to 1.3000 by several days, perhaps weeks. Generally, whilst above 1.2700, and certainly 1.2450, the trend remains upwards, but levels are not very clear and we should expect many more "spikes" and "false breaks" as the euro grapples with these very important long term resistance levels. Today we should try to hold above 1.2780 again, but we need to see more evidence of better support emerging at this level before we can be more confident in this outcome. Only a break below 1.2700 will change the short term picture, which would then probably see a full retracement to 1.2450.

Strategy today: Buy dips on signs of basing above 1.2780, stops below 1.2780, target 1.2900 and then 1.3000.

Chart: More messy moves below 1.2900 mean that we might have to wait a little longer for a range break higher.