The release of slightly better than expected preliminary GDP and unemployment claims for the US did manage to add some bearish momentum to the eurodollar before it found support at 1.2525 from where it has been attempting to rally higher. It goes without saying this level needs to be taken out for the pair to continue lower. However, what is also significant on the 30 min and hourly chart is that this price point marks the low of the volatility candles which were triggered at the time of the news releases.
A trigger of such a candle – in other words a candle which is outside the ATR for the instrument in question – often results in the price action simply retreating within the spread of the candle.
At time of writing the pair is once again approaching the 1.1225 price point and if taken out should see the pair move to test the next level of support at 1.1213.
The good news for eurodollar bears is that the hourly chart of our currency strength indicator is highlighting further downside for the euro as well as a positive move higher for the USD.