EUR/USD Range Trading above 1.3500

EUR/USD (daily chart as of June 16, 2014) has been trading below 1.3670 and the 200-day EMA for about four weeks since May 22. Price touched a high of 1.3670 on June 9, and once again closed right at the 200-day EMA.

The pair did exactly the same thing on both May 26 and June 5, with the high of 1.3670 and the closing price at the 200-day EMA (three red arrows on chart). On June 6, price reached a high of 1.3675 but closed below the 200-day EMA.

As mentioned previously, 1.3670 is the last significant low point (green arrow) of the prior uptrend, and the 200-day EMA has been the pair’s long-term support since July 2013. It appears that the 200-day EMA is moving lower, away from 1.3670.

Current price is trading in a small range between two short-term trend lines (line 3 and line 4 on chart). If price breaks out above line 3, it may trade higher to test the 200-day EMA again. In the event that price breaks down below line 4 and below the key dividing line of 1.3500/3477, it should continue its downtrend move.

The ECB cut its deposit rate to -0.1% early this month, and lowered the key interest rate to a record 0.15% to boost the economy and avoid deflation. Upcoming major risk events include U.S. Consumer Price Index data and the Fed interest rate decision, which are scheduled for June 17 and 18, respectively.

Support levels below:
1st support: short-term uptrend line 4
2nd support: 1.3500/3477 (June 5 low / Feb 2 low)
3rd support: 1.3400 (November 21, 2013 low)

Resistance levels above:
1st resistance: short-term downtrend line 3
2nd resistance: 200-day EMA or 1.3670
3rd resistance: 1.3735 (May 19 high)