Originally published by AxiTrader
When I left my desk last Friday afternoon the euro was trading around 1.2050. This morning it is trading at 1.2266, more than 200 points higher in less than two full trading days.
The move has been relentless as news of a potential grand coalition in Germany combined with news around Spain and the Netherlands favouring a soft Brexit to drive the euro and pound sharply higher.
That the euro bulls and US dollar bears had the bit between their teeth and wouldn't be persuaded from the path of a higher euro was in evidence with little reaction to either a stronger than forecast US core CPI print nor a warning from Bundesbank President Jens Weidmann that just because QE might end soon doesn't mean the ECB is in a rush to hike interest rates.
Market expectations appear to be for further US dollar weakness in the week's ahead. Indeed the weekly charts suggest the euro could rally into the 1.2650-1.2750 region.
But, after such a sharp, hard and fast surge in the euro it would be reasonable for prices to consolidate this move. That consolidation could either be a period of time where the euro does nothing or a price consolidation where it pulls back.
The most obvious target if it is to be a price consolidation is the 38.2% level of this latest move at 1.2157.
But in order for this move to begin - if it begins - the hourly Euro chart provides a clear level of short-term support, in what looks like a topping process, that EUR/USD would need to break.
That level, 1.2245/50 is clear on the chart below and it is the key level I'm watching in the euro today and over the next 24 hours.
Have a great day's trading.