The eurozone is in deflation already, the euro rises only complements that and the only way this view does not play out is that euro area leaders give in to their own quantitative easing. On the other hand, the rising commodity prices pose the inflation threat that has been lingering for very long time and those with their dollar crash views would come out screaming again, the rising gold prices have recently supported their cause. In a floating rate regime, however, there are only exchange rates that reflect capital flows and trade flows, not the intrinsic worth of anything, prices move to their intrinsic worth during only a crisis. So all this for now should only mean that money is flowing out of the US into other assets. OR that trade is in favor of Europe with its improving competitiveness thanks to deflation. That has some truth as the Eurozone does share a positive trade balance with the US.

EUR/USD has been in an uptrend from 1.3673 levels. It is facing strong selling pressure at 1.39 levels. We are upbeat only above 1.4 levels. The pair is taking support at 1.3780 and facing resistance at 1.3863 levels. If it crosses the 1.3863 levels, it will shoot up to 1.3910 and 1.3960 levels. If it breaks the 1.3863 levels, it will fall up to 1.3740, 1.37 and 1.3673 levels. Until the pair crosses the 1.3910 level, down side gates are open for 1.3645 and 1.36 levels.