EUR/USD weekly forecast 24th-28th February 2014

The Euro rallied against the dollar last week helped also by the lack of major news. Fundamentally I am definitely not an euro bull but we have to consider that the market thinks otherwise and whoever wants to sell the euro needs to wait for a trigger. However, the ECB is carefully monitoring the coming economic data and the CPI figures on monday could trigger some volatility.

Euro dollar

By looking at the EUR/USD daily chart we can see that we are still in an uptrend, however the pair is capped between 2 trend-lines that offer both resistance and support, this means that a breakout is coming. It’s difficult to take a position at the moment, I think the best strategy is to wait and see…a break above the 1.38 level would be bullish for the euro but on the other hand I personally think that weak inflation could trigger some action from the ECB and weaken the euro.

20140222 daily graph

Above the 1.3450 level the euro has proven to be quite resilient, thus I would feel confortable shorting the euro at a break of the 1.36 level or even better below 1.3450. Despite the taper the dollar didn’t show much strength, thus I would suggest the euro bears to check some other pairs to short the euro such as EUR/GBP

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