ForexGen | Euro / US Dollar Breaks Out of Range, Aims Higher

The Euro raced higher against the US Dollar in early New York trading hours as forex markets fell in with a rebound in risk appetite fueled by the announcement that the Federal Reserve will commit up to $800 billion for a new program to bolster credit access for homebuyers, consumers and small businesses.

The news sent European stock markets and US index futures sharply higher just before the opening bell on Wall St, while forex traders dumped safe haven currencies, weighing on the greenback. The bulls retained momentum since and EURUSD has now definitively broken above the upper boundery of the range that had contained the pair since late October. This confirms our analysis from the past several weeks calling for a bullish correction in EURUSD after identifying positive divergence between price action and the RSI oscillator. A Bullish Engulfing formation seen at the end of last week's trading added further confirmation.

We will now look for the pair to rise into the 1.33-1.35 area to meet resistance established by a downward sloping trend line connecting the highs following the breakdown of the bullish trend below 1.60 in mid-July.

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