With the move above 1.20 on EURUSD today, many will be left scratching their heads at the not only recent strength in the pair but also the sustained nature of this. For an idea of basis, in April this year EURUSD was trading  1.0540, in a little, over 4 months that’s an increase of 14% for one of the mostly widely trade currencies pairs across the globe.

What’s more intriguing on this is the ECB’s stance. A stronger or strengthened currency does no favors for the many exporters within the Euro Zone and leaves them with a perplexing situation conundrum. Do they halt or reduce the accommodative monetary policy going forward in the hope it does not derail the fragile recovery for Europe?

If we look at trading in general, on a leveraged basis a continued bias towards the sell side from 1.15, often is relatively high volumes, means many traders were liquidated on the push above 1.20. In addition to this, a key technical indicator called RSI- Relative Strength Indicator, which shows if an asset is either overbought or oversold, has now reached 74, with 75 indicating over bought territory. Whether this slows the upward trajectory for EURUSD is another question entirely.

Good luck,

Jordan Hiscott, Chief Trader

 

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