Euro May Have Topped as Slide Continues Toward Weekly Low

While it may be too early to say with conviction, euro may have reached a top on Friday’s 1.4049 high and has been pulling back today towards the Tuesday low at 1.3858. EURUSD saw volatile action this morning with the high and low of the day firmly established within the two hour period of US trading at 1.3994 and 1.3870, respectively. Equity markets in the US closed with the Dow30 lower by more than two percent while Treasuries climbed. In the last month, the euro had gained over a thousand pips, or more than ten cents, on a resurgence of risk appetite. The rally may finally be starting to wane as traders wake up to rising unemployment and the negative feedback loop this will create on safer bank loans and economic recovery. As the greenback continues to gain against the euro, traders may be keen to watch Tuesday’s low which previously supported the pair. RSI has moved lower on the 60-minute and daily charts for the pair, adding further sign of downside sentiment. A move of over 100 pips is likely with initial support at 1.375, approximately the resistance that marked the end of the rally in March and breakout in May.