With pretty much empty calendar so far this week, technical analysts may have upper hand over fundamentals when trying to foresee price movement on the eurodollar pair. After last week surprised us with some strong moves, price action has become a bit tricky, therefore it may be a clever strategy to focus temporarily on short-term opportunities untill the dust settles.

Dollar bulls doubted

Dollar made impressive gains from February to April as ECB easing efforts were combined with hopes for the Federal Reserve to start reducing its quantitative easing program amid improving economic picture. This, however, was put to doubt recently after several unimpressive economic reports, led by jobless rate rising to 7.6% and therefore shifting away from the 6.5% Fed’s benchmark. Moreover, manufacturing and service sectors recently showed some improvement after literally years of depression, fueling hopes for economic recovery in the Eurozone.

Technically, after the euro broke above 1.3300 to a fresh three month high today, shorting the spikes may be even more dangerous trading strategy. Opposed to that, we may want to look for buying into dips now. On the upside the euro bulls are likely eying the 1.3342, which serves as an important resistance and also is a 61,8% Fibonacci retracement from February high. After closing above this level, sentiment is likely to turn more bullish, heading towards 1.3518. On the downside, key support lines are at 1.3175, 1.3125 and 1.3075.