Daily FX Wrap Up

After giving back all of Tuesday’s gains in the early morning training hours, the Euro rallied against the dollar to finish out at 1.2715. Earlier in the week, the Euro had received favorable news from the Purchasing Managers Index, which helped push the Euro to a 105-pip gain. Adding to the seesaw effect, Kansas City Federal Reserve Chief Thomas Hoenig gave a favorable opinion about the US Economy while the Dow Jones Index’s soared to a record breaking close. Current support for the EUR/USD is seen at 1.2665, with resistance found at 1.2760. For the past month, EUR/USD has traded between 1.2635 and 1.2830, lulling just about every market participant to sleep in the process. However, periods of low volatility are often followed by breakouts, so now would be the time to keep an eye on price action. It is exciting to note that this is the tightest the trading range has ever been for EUR/USD (since the advent of the euro in 1999). Going back 10-years with synthetic prices, there are only two instances when volatility was this low – December 1996 and August 1998. Both instances led to breakouts within 2-weeks producing moves of over 1,000 pips in less than 2-months.