Many commodity markets are quiet today and the US equity and Treasury futures will have an early close because of Hurricane Sandy. The NYSE, which certainly does not close often, is closed today. We wish safety to everyone affected by the storm.
This morning, we take a look at the Euro currency futures traded on the CME. Ever since an incredible rally in the first half of September 2012, the Euro has shown a consolidation pattern between 1.28 and 1.32. Since making a recent high above 1.31 in September, we notice that the Euro has made “higher lows” and “lower highs,” which are signs of non-conviction in the market place about the Euro’s direction.
We have a tough time seeing the Euro have a sustained rally above recent highs above 1.31 because the poor economic data coming out of the Euro region is just too difficult to look past and start to think the Euro will rally. Also, the US Dollar Index looks like it is building some bullish strength above the 80 level, and with this we see the Euro potentially testing the lower end of its recent range at 1.28.
Our key pivot level is 1.31, and this is our major resistance level, which the Euro has not been able to trade consistently above since making its recent high above that level in September. Furthermore, the Euro is currently trading beneath two major uptrend support lines going back to September and August.\
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