EURUSD tests the 61.8% retracement and swing area
The EURUSD extended to the highest level going back to June 9th today (see earlier post on the pair by clicking here). In the process, the December high at 1.0735 was broken . The 61.8% of the 2022 trading range was also broken at 1.07468 with the price moving to a high of 1.07601. The currenct price is back below the retracement level at 1.0740.
Looking at the daily chart, the price today also entered into a swing area that was a floor in March and April of 2022, and then a ceiling in May and June before moving to the downside. The move lower from June culminated in reaching the multi decade low of 0.9535 in September. Since then, more than 61.8% of the 2022 fall has been retraced.
What next?
This is the area where the buyers and sellers will use as the barometer for the market as we head further into the new year. Of course, the CPI data to be released on Thursday will be a key event that could easily be the catalyst for more bullish or bearish going forward.
The Fed officials so far are saying “we aren’t done yet. We don’t want to repeat the mistakes of the Volker years from decades earlier”. Meanwhile the markets have their own views as the 10 year moves back toward 3.5% with the Fed talking about 5.0% to 5.25% for the Fed Funds target. Who will win?
Selling in this area has the risk of a break of 1.1805 as the stop. Move lower, and getting back below the 1.0594 to 1.0640 would be the downside target.