This Thursday the pair EUR/USD has strengthening considerably and today it has reached nine-month highs at 1.3692. Investors are disappointed, that the solution of US budget crisis is temporary. The raise of national debt limit allows American government to work until January 2014 and then the crisis may burst again. Moreover, experts assure that FRS won’t cut QE program while economic state is unstable. The rise of the pair was also supported by positive fundamental data from China. Its GDP index has risen up to the 7.8%, the highest level this year.
Support and resistance
According to the technical indicators, the pair is moving towards key level of 1.3710. If this level is broken through, Euro will go up to the level of 1.3780. Otherwise we expect a correction to the levels of 1.3620 and 1.3575 (middle MA of Bollinger Bands indicator). Bollinger bands show a divergence, confirming the upward trend. MACD histogram is in overbought zone, its volumes are increasing. Stochastic lines are also in overbought zone, but they have crossed and going to turn down.
Regarding the situation it is recommended to open long trades with targets around 1.3710. Short positions can be placed after the breakdown of the 1.3650 level.