The Euro surged to 1.3105 for the first time since May shortly after U.S. equity markets opened, but was unable to hold this level as stocks corrected sharply during the trading session. The subsequent break triggered volatile moves throughout the session with the market retracing inside the 1.3105 to 1.3059 range several times.

The EUR USD began to break out to the upside last night buoyed by strong European earnings reports and the dim outlook for the U.S. economy. Some traders are factoring in the possibility that the European Central Bank may be in a position to raise its benchmark interest rate before the Fed acts upon the U.S. borrowing rate.

Technically the Euro is in a strong uptrend. The breakout above the last swing top at 1.3028 reaffirmed the trend as well as the crossing of the .618 retracement level at 1.2998. In order to sustain this rally, the currency has to close above 1.2998.



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