For the best part of the last three months EURUSD has tried and failed to crack the 1.2530 level with little in the way of success, retreating on each occasion.

Speculation about whether the ECB is likely to completely end its asset purchase program at the end of this year, while the US Federal Reserve remains on course to raise rates by at least another 0.5% by year end should in all seriousness keep interest rate differentials in favour of the US dollar.

Yet the euro has remained significantly well supported, despite a 2 year interest rate differential in favour of the greenback of 2.9%, a gap that has already seen an increase from 2.5% at the beginning of this year.

By all definitions the euro should be lower based on these dynamics yet it isn’t, however it is running into significant resistance at around this important area.

A quick look at the monthly chart only reinforces how important this area is, with a break potentially opening up a move through 1.3000.

Source: CMC Markets

We have a downtrend line from the 2008 highs at 1.6038, which intersects the price action just above the 1.2500 level, along with the 100 and 200 month moving averages. We also have the 38.2% retracement of the entire down move from those same highs and the lows at 1.0340 in 2016 at 1.2530.

While below this key trifecta of resistance levels the risk is for a move back lower towards 1.2200, however if we do get a move higher through 1.2600 it could well be explosive.

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