Since early February, the euro raced from 1.44 to past 1.59, put in a triple top and hit an all-time high on April 10 of 1.5914. “It’s been acting like a completely different animal,” says trader Michael Weiner, and support and resistance are being redefined. Case in point, the range on April 10 spanned two thirds of Weiner’s short-term range from 1.57 to 1.60.
“I don’t rule out a break to 1.6250, but that will be unsustainable in the short run,” says Brian Dolan, chief currency strategist at Forex.com, adding that the European Central Bank would then start selling euros to reintroduce two-way risk into the market. “The euro is threatening to become a destabilizing element to the Euro zone economy. It becomes a self limiting element in the outlook,” he says. In May, he expects the euro to trade between 1.53 and 1.58.
But with the European Central Bank concerned with inflation and the U.S. Fed turning a blind eye to it, the euro may be able to continue the march upward or at least maintain recent levels.
“Inflation dominates Euro zone monetary policy,” says Heather Mitchell, trading specialist at OptionsXpress. “The tone of these comments could spark buying for
the currency.”
Jason Yu, chief currency analyst for ODL Securities, expects consolidation between 1.5340 and 1.59.
