1.1300 Is Key For The EUR/USD

For the fourth session in a row, the 1.1300 handle has drawn heavy participation from EUR/USD traders. The market has become compressed in this area, with daily ranges tightening between 1.1325 and 1.1280. It will be a surprise if rates move significantly from current levels before Thursday’s release of the Eurozone Markit PMI (April) or U.S. Retail Sales (March).

During the U.S. overnight, bidders hit the EUR/USD following the release of China’s GDP. Later on, the markets did a relative about-face when the Eurozone Core CPI (MoM, March) came in above estimates at 1.0%. For the time being, it looks like another day of consolidation for the Eurodollar.

EUR/USD: Technical Outlook

At press time (11:30 AM EST), the EUR/USD is in full rotation near the 1.1300 handle. Following a failed rally above Tuesday’s high, we have seen rates fall back toward the established value area of 1.1280-1.1300.

Here are three support levels to watch for the near future:

• Support(1): 38% Current Wave, 1.1284
• Support(2): Bollinger MP, 1.1283
• Support(3): Daily SMA, 1.1257

Bottom line: Until proven otherwise, rotation is the rule for the EUR/USD. Rates are stuck in the mud near 1.1300 and it will likely take Thursday’s economic calendar to break the stalemate.

However, fading the extremes of slow markets can be profitable. Until elected, I will be looking to go long from just above the Daily SMA. With an initial stop at 1.1224, buys from 1.1259 should be good for 25 pips on a sub-1:1 risk vs reward management plan.