By Fast Brokers
The EUR/USD bounced well from the inflection point of our 2nd tier uptrend and 3rd tier downtrend lines. Though the volume wasn’t significant, the action was enough to get the EUR/USD beyond 4/30, and subsequently 4/13 highs. Since the volume to the upside wasn’t anything out of the ordinary, we could witness the present rally top out soon. Hence, although we are still bullish on the EUR/USD trend-wise, we are neutral/negative for the near-term. Short term evaluation aside, the EUR/USD continues to make noteworthy strides fundamentally.
Given U.S. equities continue their path to recovery, the EUR/USD should follow suit considering their strong positive correlation. The EUR/USD is comfortably above our uptrend lines, and the main downtrend barriers left is our 3rd tier downtrend line and the psychological 1.35 level. If the currency pair can manage to climb through these two barriers, there could be little holding back the EUR/USD from logging exciting gains. Meanwhile, we expect to EUR/USD to remain positive correlated with the S&P futures for the next few sessions as investors eagerly await the ECB’s meeting on Thursday. That being said, we wouldn’t be surprised to see U.S. equities hesitate with the S&P sitting at its critical 900 level while investors also await the release stress tests on Thursday.
The ECB’s meeting on Thursday will be critical since the ECB governors have offered various opinions as to the direction of the central bank’s monetary policy. The ECB has maintained its benchmark rate at a respectable level while avoiding liquidity measures such as quantitative easing. The uncertainty among investors could keep any uptrend in check as investors eagerly await results from the meeting. The ECB’s announcement will come on the same day as America’s stress test results, meaning we expect to see a large spike in volatility on Thursday.
Fundamentally, we maintain resistances of 1.3389, 1.3420, 1.3442, 1.3479, and 1.351. To the downside, we hold supports of 1.3358, 1.3323, 1.3283, 1.3241, and 1.3211. The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3390.
Market Commentary provided by Fast Brokers.
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