The EUR/USD pair shot straight up like it was fired out of a cannon on Thursday. The pair was reacting to a few answers during the post meeting by European Central Bank Chairman Mario Draghi relating to a more upbeat than thought assessment of the economy. Also, Mr. Draghi stated that he thought the G20 countries were going to adhere to their promises not to devalue their currencies. This is a truly stunned comment, as the Bank of Japan and the Swiss National Bank have both explicitly mentioned that they are looking to keep the currencies weak.
The Federal Reserve isn’t too far behind those banks either. In this light, it seems that Mr. Draghi has essentially given the “green light” to traders everywhere to buy the Euro. The ECB isn’t going to join in the “race to the bottom”, and this of course had a lot of people reassessing their outlook on all EUR/XXX pairs. With that being said, there were also other reasons why this pair went higher as well.
Technicals
The trend line on this chart is a fairly obvious one. This is the kind of trend line I like – even the densest of traders out there can spot it. Also, the 50 day exponential moving average is hugging the trend line, so a move higher wouldn’t have been much of a surprise to many of you.
I have recently said that I thought the area between 1.3150 and 1.33 would be far too resistive for the pair to break above. I think this has changed, and now you have to look at this pair as a market just waiting to break out. With a central bank that oblivious to what is going on around the world, it might be a minute or two before the ECB acts to protect their exports. The value of the Euro should continue to rise now that it appears there is no real impediment to it. The pair could see a pullback, but I suggest that the pullbacks will simply be buying opportunities. A break above 1.33 is obvious strong as well.