It has been a big week for the EUR/USD, rallying more than 110 pips to the daily Double Top pattern near 1.1350. For the past three days, bidders have driven rates higher in response to the FED’s 180-degree shift in policy. Given concerns over an economic slowdown, relaxed U.S. monetary policy, and the U.K. leadership picture clearing a bit, the EUR/USD has eclipsed April’s highs.
Moments ago, FOMC member Lael Brainard issued several comments toward the FED’s evolving policy toward the USD. The basic gist was more of the same: uncertainty is growing, risks are up, and rate cuts are imminent. Thus far, the comments appear to have brought more buyers to the EUR/USD.
EUR/USD Approaches Daily Double Top
One look at the daily chart pretty much sums up the situation: a dovish FED means a bullish EUR/USD.
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As we roll into the final trading week of June, here are the levels to watch in the EUR/USD:
- Resistance(1): Daily Double Top Pattern, 1.1343 – 1.1347
- Support(1): Daily SMA, 1.1271
- Support(2): Bollinger MP, 1.1228
Bottom Line: At this point, it is all systems go for the EUR/USD, but that may change very soon. Rates are approaching a key area of topside resistance just beneath the 1.1350 handle.
Until elected, I will have sells ready to go from the Double Top area at 1.1447. With an initial stop at 1.1376 this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.
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