At last Thursday’s ECB press conference it was enough for Mario Draghi to hint at further QE for the eurodollar to sell off sharply, taking the pair from a high of 1.1243 before coming to rest at the support platform at in the 1.1087/96 region. This support platform was tested again on Friday as a degree of buying for the pair stepped in ahead of the Labor Day holiday in the US and Canada.
And whilst the start of this week has seen relatively muted price action for eurodollar given Monday’s holiday, the tone of this action has been overall bullish with each session threatening to take the pair through and away the volume point of control in the 1.1200 price region. This has materialised in today’s trading session which has seen eurodollar move from a low of 1.1171 to trade, at time of writing at 1.1278. The 1.1171 low also coincided with the `100 ma which has also added its own impetus.
However, the groundwork for today’s move higher was laid during yesterday’s session where the day’s candle ended with a deep lower wick and reasonable volume, suggesting a push higher was likely to occur.
Moving forward for eurodollar to continue to maintain this bullish tone it is the resistance in the 1.1295 region which needs to be breached on strong and rising volume. Short term there is no reason why the pair cannot go through this level, and on to test the 1.1332 price point as the move is also reflected on the 4hr currency strengh indicator where the euro still has some way to travel higher, while the US dollar is currently moving lower.