This week was first working out nicely, according to last week’s pattern.
We reached a strong resistance of 920 and bulls didn’t manage to stay above. Its the same level from a previous ECB meeting, so it won’t break easily, it seems. But after that, EU calmed down between 830-850 and was preparing for another attempt to break the high…BUT then friday happened and a crazy move on the pound messed up the plans for EU, too. For whatever reason GU overreacted to the retail sales data, which wasn’t even so bad and turned into a bloody friday, with a 200 pip drop, without any sign of bulls along the way. EU and GU are highly correlated, but EU was doing a good job resisting the drop. So since GU dropped 200 pips, the fact that EU only closed 35 pips below thursday’s closing price, was a big win for the bulls. GU should move towards 3000 next week and unless Le Pen wins french presidency on Sunday, EU should again make an attempt to break the resistance at 920. And I think they will do it this time…like they say, third time’s the charm. Right now Macron has a comfortable lead over Le Pen in the polls…the only thing that might cause trouble for him is a low turnout. If Macron wins, EURO should turn bullish for the time being.
