Our 1.2950 EUR/USD offers came to within 15 points of being executed before the 10:00 a.m. New Home Sales sent prices to a 1.2877 low. It's a bummer we missed the fill on that trade, but for reasons I present below, a look at our 1.2820 focus level will probably not been seen here, but in a future short setup.

Technically speaking, there is a symmetrical price relationship at work here that projected a 1.2909 low. The August-to-October pullback traveled 456 points. This distance, projected from the December high, gave us a 1.2909 target. Obviously, we traded below the target, but not by much thus far.

Dialing into the probes of our 1.2909, target we see some interesting price dynamics here. Starting on the left side of the 30-min chart, we see the first rejection of 1.2909 on January 11 after the Bank of England surprised the markets by raising rates 25 bps. Forty-five minutes later, the European Central Bank left rates unchanged, which sent the euro lower to a 1.2875 area low. The next day, US Import prices were released at 8:30 a.m. at almost double expectations, boosting the prospects of higher inflation. At the same time, US Retail Sales came in well ahead of expectations. EUR/USD sold off to a 1.2865 low, before rallying sharply higher to close the day above 1.2900, despite the strong-dollar data. This morning, US Durable Goods and New Home Sales both came in ahead of expectations sending the dollar below 1.2900 for another shot, but could only manage a 1.2877 low, before rallying back above 1.2900.

Even with these five pieces of strong dollar data, it seems EUR/USD wants nothing to do with sub-1.2900 prices for now. For these reasons, I called for a very tight EUR/USD entry price last night knowing that our potential below 1.2880 was limited, for now. Let's cancel the 1.2950 sell idea and reassess Sunday night.





Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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