EURUSD Breakout

Finally the EURUSD breakout has occurred.



I'll be looking for a pullback to the resistance level, with buying opportunities in a zone between 14,360 and 14,460, subject to further analysis.

Here is the breakout in close-up - notice that price hit a price target level at 14,632 which is a monthly pivot level - even though I am a month behind on updating my pivot levels.

EURUSD

In my last post I showed EURUSD at a critical price level. Since then, price has made a couple of failed breakout attempts, and has been pushed backwards by the surprising announcement from the Bank of England to increase the levels of quantitative easing. However, positive economic reports keep being delivered to the market - there are no signs of momentum weakening, and a bullish breakout is still on the cards.

News Events for the Week

Well of course it's the 1st week of the month, so the biggie is the Non Farm Payroll announcement on Friday at 13:30 BST. No matter what instrument you follow (FTSE, DOW, EURUSD) prices are at a critical level and on the verge of a new trend. The consensus expectation is for the unemployment levels to increase by 345k. This would be the smallest increase for almost a year, and compares to 467k for last month. A figure lower than this may tilt the balance and cause the dollar to breakout lower, whereas a significantly higher figure may bring a return to dollar strength with more risk-averse trading.

Thursday brings interest rate decisions for the Bank of England at mid-day and from the European Central Bank at 12:45. The expectation is for the BOE rate to remain at 0.50% and the ECB rate to remain at 1.0%. These announcements should be non-events if the consensus prevails, though there may be reaction to the small print regarding BOE's bond purchasing scheme (printing money, quantitative easing, whatever-you-want-to-call-it).

Tuesday brings the Reserve Bank of Australia interest rate decision at 5:30 BST. The AUD has been strong recently and is at historically significant levels. Current interest rates are at 3.0% and expected to remain unchanged. As with the BOE, the commentary is likely to be more significant, especially if there are clues to a potential increase in rates within a specified timeframe.