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By HaleStewart February 19, 2014 9:08 am
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Will the 1.38 Level Again Provide Resistance For the EUR/USD Pair?

Above is a chart of the EUR/USD pair, which has hit resistance at 1.38 on three separate occasions over the last six months -- once in October and twice since last December.

The question, of course, is why?  Starting mid-2013, the news mix between the EU and US was decidedly stronger coming from the EU.  And while there was talk of US tapering, the general consensus was it would occur sometime mid-2014 at the earliest. 

In contrast, since the beginning of February, US news has been decidedly weaker relative to the EU, giving the euro some upside momentum.  But remember the importance of weather related factors to US data which should be decreasing over the next few weeks.  And, assuming we're in the middle of a lull rather than a slowdown, the Fed will still continue to taper, which is dollar bullish.

In other words, be very careful around 1.38.  Wait for a strong push about that level before committing to a stronger position.

 

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