EUR/USD Steady Above 1.38

 | Apr 24, 2014 12:37AM ET

h3 EUR/USD

In the last couple of weeks the euro has eased back from the resistance level at 1.39 after surging up higher to that level near the beginning of April and it seems content to settle around 1.38 for the time being.  For the last couple of months now the euro has spent all of its time between two key levels of 1.37 and 1.39 with a two year high above 1.3960 being achieved in that time.  The 1.38 level over that time has also reinforced itself as one of significance after providing stiff resistance on numerous occasions and now providing some support.  Prior to the current trading range, throughout the first half of February the euro enjoyed a solid move higher moving from support around 1.35 up to test the key level at 1.37. It was able to move through the 1.37 level before consolidating and spending several weeks resting on support at that level.

To finish out January the euro continued its decline and moved to a two month low touching below the support level at 1.35. With the current trading range considered, the 1.3550 level seems a distant memory however it will most likely play a role should the euro drift lower and fall through the support at 1.37. With its present price action considered, a return back to the 1.37 level in the immediate future is likely.

November last year was a good turning point for the euro as it reversed well after the strong fall from the key 1.38 level. traded to the euro did well to bounce strongly off support at 1.34 and recover the lost ground from the previous couple of days which saw it fall from the resistance level around 1.3550. This was after a few weeks which saw it move steadily higher from a support level at 1.33 back up to a three week high just above 1.3550. Over the last few months 1.3550 has been a key level.

The 18-member single currency, the nemesis of many a portfolio position, will not go down and has now climbed higher for the time being. For a brief period, the EUR was hemmed in and comfortably trading within arm's length of €1.3800 due to option-related interest. The market has been waiting for eurozone flash purchasing managers index (PMI) data to either push the EUR out of its current position, or with weaker readings, strengthen the case for the european Central Bank (ECB) to act. To date, flows into european equities and the peripheral debt market have been supporting the EUR; however, many investors still require fundamental assurance and that has come in the form of some flash PMI readings.