[Dan]

EUR/USD – It’s difficult to know what is odder about this week’s moves – the ease with which the EUR plunged below 1.41 earlier this week or the ease with which it made all the ground back, and then some. While the lower bound of the support zone (1.4050) was broken briefly, the EUR will close out the week with a higher close, an outside range higher and above weekly trend resistance drawn off of the Sep/Dec/Jun highs. Following the consolidation break out noted last week (red lines), this break out (blue channel lines – a medium term bull flag), looks impressive; EUR-bullish stance seems vindicated. But before we get too back-slappingly happy, a look at the daily charts shows two bearish outside range days forming over the past two weeks and that implies strengthening resistance at 1.4300/40. Underlying trend momentum remains very powerfully aligned on the bullish side for the EUR, however, and we think that means limited (despite this week’s volatility) downside and more upside risk overall still. Above 1.4340 should see EUR/USD move on to 1.4550/00 fairly quickly.