EUR/USD-Daily Trendline Broken

The following is your daily EUR/USD outlook for March 15, 2010.

The downward daily trendline was broken on Friday, setting up for a further move higher in the EUR.  Short-term caution is still warranted due to the high likelihood of false breakouts.    That said, the “saucer” like formation on the daily charts makes a re-test of the lows recently put in a low probability in the near term.  A move above 1.3800 is what needs to be seen next.  With a high number of shorts in the EUR a short squeeze could ensue if the major resistance levels at at 1.3800 and 1.3840 are taken out.

An upside a target is at 1.3870 as well at 1.3890-1.3910.  Beyond this we are looking at a longer term target of 1.4030.

Pullbacks may occur into the 1.3730-1.3700 region.  Additional support comes in at 1.3680 and 1.3620.  A drop back below 1.3680 would indicate the break higher was false and the pair will move lower once again or continue to stay in a more range-bound environment.  A further drop, where that situation to develop, would likely find support at 1.3540, with a drop below 1.3520 indicating a retest of range lows at 1.3430.

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