The picture is the exact same as yesterday. The story remains the same (or close to it) as the price remains within it’s boundaries.
For today, the price found it’s support a little lower than yesterday, however. The price fell below the 100 hour MA (blue line in the chart above) in the NY afternoon session yesterday and worked it’s way to the 38.2% retracement at 1.24607 during the Asian session. The subsequent rally in the London session has taken the price above trend line resistance, 100 hour MA (blue line at 1.2520 currently) and to the high spike from Friday’s trade at 1.25608 before the sellers entered (see chart above). Selling more Spanish bills at auction, perhaps the news that Draghi is skipping Jackson Hole to concentrate on the work load, and Fitch’s Riley saying the US AAA rating was in jeopardy, are cited for helping to contribute to the rally in the EURUSD.
Traders will look toward the 100 hour MA as support now (at 1.2520). With the correction off the Thursday high holding the 38.2% of the move up from the August 16 low (low reached 1.2464 vs 1.24607 retracement level), traders will likely look more to the continuation of the upside. The 100 hour MA will be the risk defining line in the sand.
On the topside, the 1.25609 level will need to be breached to ignite further buying. The high last week at 1.2588 followed quickly by the 38.% of the move down from the 2012 high at 1.25926 and the key 100 day MA at the 1.2599 level make up a strong cluster of resistance that will either turn away the buyers or lead to a further surge higher. Be aware of this area (see daily chart below). A break should not be ignored with 1.2623 area the next target above. The high from the end of June at 1.2692 followed by the June high of 1.2745 and midpoint for 2012 at 1.2763 are all key upside targets.
