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The EURUSD tumbled below the parity level finally today after testing the level on Tuesday and Wednesday and bouncing on each test.
Today, the dip buyers were not so lucky. The price moved below and moved down to a low of 0.99515.
However, after Fed’s Waller eased some of the anxiety by saying he was in favor of 75 basis points, the price moved back higher, testing the London morning session high near 1.0050. News that Italy’s PM Draghi was going to resign, sent the pair back below the parity level for the 2nd time. This time the low 0.9983 before rebounding.
Will the failure on two breaks today give the buyers the confidence to push higher in the new day and perhaps more importantly, slow the sellers down (it often takes two two to tango). If the sellers are less (or more scared) and the buyers have something to lean against (like parity), a correction can be in the cards.
The problem is the retail sales tomorrow. The expectations are for sales to rise by 0.9% and 0.7% for the core. Those type of numbers – or better -and the calls for 100 bps increases once again and that could see the EURUSD moving back below the 1.0000 level with ease.
Technically, traders will eyeing the 100 hour MA at 1.00593 on the topside, followed by the high from yesterday at 1.01215, a swing area at 1.01342 to 1.01433 and the falling 200 hour MA at 1.01533. The price has not come close to the 200 hour MA since June 28th.
Those are the steps that buyers would want to see now.
Conversely, fall below 1.0000 and traders may lean against 0.9983 and then 0.99515 on dips (hoping for a similar failure), but understand the buyers are just hoping. The technicals are still more weighed in the favor of the sellers and it is hard to bet against the trend.