Euro climbs as European headlines support risk

The euro was the top performing currency ahead of the US open with an advance of 0.40% against a weaker dollar. News out of Europe eased debt concerns after the Greece swore in a new government and Italy passed new budget measures demanded by the EU. Accordingly risk appetite has picked up with the EUR/USD testing resistance at the 1.3660 level. A likely break here eyes topside targets at the 23.6% Fibonacci extension taken from the October 27th and November 4th crests at 1.3715 backed by 1.3750 and the 1.38-handle. Interim support holds at the 38.2% extension at 1.3620 with subsequent floors seen at 1.3580 and the 50% extension at 1.3545. Look for the euro to remain well supported as market sentiment continues to improve into North American trade.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.4020

50-Day SMA

1.3724

20-Day SMA

1.3820

2011 EUR High

1.4939

The Canadian dollar lagged the majors early in the session despite broad-based dollar weakness with the USD/CAD pair continuing to hold just above the 38.2% Fibonacci extension taken from the October 27th and November 3rd troughs at 1.0180. Gains made after yesterday’s stronger than expected trade balance figures were pared overnight with positive headlines out of Europe this morning fueling risk-on trades as investors moved into higher yielding growth backed assets and currencies. Should risk appetite continue to improve, look for the loonie to break below interim support with downside targets eyed at 1.0164, the 23.6% extension at 1.0130, and 1.0080. Topside resistance holds at the 1.0200-handle with subsequent ceilings seen at the 50% extension at 1.0218 and the 61.8% extension at 1.0255.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.9910

50-Day SMA

1.0120

20-Day SMA

1.0110

2011 CAD High

0.9406

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB:
www.DailyFX.com

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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