The euro is presently consolidating in a narrow trading range right around 1.2880 after having recently moved down towards 1.2850 and then rallied higher. The lows below 1.2850 are the lowest levels it has traded to since early April. It has also become evident over the last few days, especially on the 4 hourly chart below, that the 1.30 level is now providing some resistance and placing pressure on price.
The euro finished last week moving back down through the long term key level of 1.30. It did spend the last couple of weeks trading right around the 1.31 level and finding support and resistance at 1.30 and 1.32 respectively, however the former level has now been broken. In finishing last week below 1.30, it moved to levels not seen in over a month. Over the last month the 1.32 level has become quite significant and has been an obstacle to the euro moving higher (evident in the right half of the daily chart below). During this time, it has had some periods of little movement followed by sharp bursts.
A couple of weeks ago, the euro exhibited a classic pin bar reversal candlestick pattern which was indicating the significant selling pressure it experienced at any price above the 1.32 level and likely lower prices to follow. This reinforced the significance of the 1.32 level and how it was going to take considerable effort to move through there.
On this pin bar, it moved to near 1.325 and to its highest level in more than two months, since the end of February when it was falling heavily from up near 1.34. Just as quickly, it has fallen away and now moved down to the one month low below 1.30.
Previously, it was quiet and spent the bulk of the prior two weeks trading within a narrow range between 1.30 and 1.31, which reinforced how significant this two cent range was. In the middle of April the euro surged up towards 1.32 and ran into a wall of resistance at that level, to then be followed by a sharp fall back towards the then support level at 1.30.
Over the last month the euro has done well to weather the storm through February and March which saw it fall sharply from around 1.37, although its decline over the last few days may be reversing this good fortune. Despite its strong rally in the first half of April, it was only a few weeks ago that the euro dropped to its lowest level since the middle of November around 1.2750, so it did very well of late to move back strongly above 1.30, despite its recent lapse.
The euro has spent the best part of the last month consolidating above the key 1.30 and 1.29 levels after its decline throughout February. Over the last couple of weeks, the 1.30 level has been called upon again to prop up price, although it may have reversed roles now as it is providing some resistance to movement higher.
Sentiment has completely changed with the euro and the last couple of months has seen a rollercoaster ride for the euro as it continued to move strongly towards levels not seen in over 12 months above 1.37 before falling very sharply to below 1.28 and setting a 14 week low a month ago.
The eurozone has slumped into its longest recession ever, after economic activity across the region fell for the sixth quarter in a row. Economic output across the single currency area fell by 0.2% in the first three months of 2013, statistics body Eurostat reported on Wednesday.
France, Spain, Italy and the Netherlands all saw their economies shrink as the economic crisis in the eurozone continued to hit its largest economies. Eurostat’s figures showed that the eurozone economy has contracted by 1% over the last year, putting further pressure on leaders as unemployment climbs to new record highs. The 0.2% contraction in the first quarter was an improvement on the 0.6% drop recorded between October and December, but analysts warned that the eurozone’s economic outlook is darkening. 
EUR/USD May 16 at 00:30 GMT 1.2882 H: 1.2942 L: 1.2843
EUR/USD Technical" title="EUR/USD Technical" width="600" height="83">
During the early hours of the Asian trading session on Thursday, the euro is consolidating in a narrow trading range right around 1.2880 after having recently moved down towards 1.2850 and then rallied higher. Since the start of February, it has fallen sharply from new highs above 1.37, although it has experienced some strong rallies in that time trying to claw back lost ground. Current range: trading right around 1.2880.
Further levels in both directions:
• Below: 1.2800.
• Above: 1.3000, 1.32000 and 1.3300.
(Shows the ratio of long vs. short positions held for the EUR/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The EUR/USD long position ratio has risen sharply in the last couple of days as the euro has fallen back down below 1.29. The trader sentiment has shifted and is now in favour of long positions.
Economic Releases
- 04:30 JP Capacity Utilisation (Mar)
- 04:30 JP Industrial Production (Final) (Mar)
- 09:00 EU HICP (Final) (Apr)
- 09:00 EU Trade Balance (Mar)
- 12:30 US Building Permits (Apr)
- 12:30 US CPI (Apr)
- 12:30 US Housing Starts (Apr)
- 12:30 US Initial Claims (10/05/2013)
- 14:00 US Philadelphia Fed Survey (May)
- EU ECB Governing Council Meeting hold non-rate setting meeting