Euro Post-ECB: EUR/USD, EUR/JPY Tangle With Big Resistance

This morning marked the announcement of the December ECB rate decision and there was little surprise as the European Central Bank extended their QE program, as was widely expected. As discussed by Justin McQueen earlier this morning, the single currency rose on the announcement, hinting that what was announced was already well priced-in ahead of time.

EUR/USD is currently encountering a long-term resistance zone that came into play last week after the pair broke above the 1.2000 psychological level. That same 1.2000 level produced a strong resistance reaction in early-September, but upon re-approach, bears could hold the pair back no longer as buyers pushed up to a fresh two-year-high at 1.2178.

But, that’s around the time that this confluent resistance zone began to bring sellers into the picture, and ahead of the ECB rate decision this week, the pair held a series of short-term lower-lows as market participants readied for the rate decision, gearing up for a possible surprise that obviously did not happen.

EUR/USD FOUR-HOUR PRICE CHART

(Click on image to enlarge)

EURUSD Four Hour Price Chart

Chart prepared by James StanleyEUR/USD on Tradingview

The big question at this point is whether the shot of volatility that showed up in the pair this morning might be able to stick around. Taking a shorter-term look at the matter, bulls are getting a bit more aggressive after this morning’s announcement, helping to produce a series of short-term higher-highs as price action has scaled back into this resistance zone.

Of note – the price of 1.2167 is the 50% marker of the 2008-2017 major move, while 1.2134 is the 50% marker of the longer-term 2000-2008 move in EUR/USD.

Taking a shorter-term look at the matter, and we can see where this morning’s higher-high has already begun to pull back – and the big question is whether buyers show up to offer higher-low support, keeping the door open for a test of the recently-set two-year-high.

1 2
View single page >> |

Disclosure: See the full disclosure for DailyFX here.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.