By Fast Brokers
The EUR/USD kept steamrolling through May 22 highs on increasing volume, and is distancing itself from the psychological 1.40 level on Monday. It appears the action may not slow today with the 8:00 bar on the 4 hour registering a higher volume than the previous 5 sessions. Additionally, our trend lines are reaching their much anticipated inflection point. With the EUR/USD making a key fundamental move to the upside, it appears investors are choosing to go the way of the uptrend. That being said, investors should keep a close eye on volume, because as soon as it tails off, the EUR/USD should reach a near-term peak. We’re already witnessing a slight pullback after the run higher earlier this session. If Friday wasn’t the peak in volume, then it seems today may be the top with the bulls running out of energy.
Regardless of any near-term peak, the EUR/USD remains in great shape. The currency pair continues its bull run with all foreseeable medium-term downtrend line pressures fading into the distance. Even though the EUR/USD’s uptrend has played out beautifully, the currency pair is approaching some near-term obstacles which could result in some consolidation. These obstacles include 12/29 and 12/18 highs. Therefore, the 1.43-1.47 area could prove to be a bit challenging in the near-term. While a wide 10% range, 1.43-1.47 gives you an idea of where the EUR/USD might bounce around. 1.43 would naturally serve as the 1st consolidation point with investors awaiting the results of the ECB meeting on Thursday. We won’t see too much data from the EU until then, giving all the more reason to anticipate an incoming period of consolidation. If the EUR/USD can manage to pop above 1.4432 then the currency pair may ignore 1.43 consolidation and accelerate near-term gains.
Meanwhile, economic data around the globe continues to improve. Investors are shrugging off the GM bankruptcy in what appears to be a buy on the news. While investors are anticipating the ECB to keep its benchmark rate at 1%, the central bank pulled a trick card last meeting by announcing the purchase of covered bonds. As a result, investors will be paying more attention to the ECB’s action and if inaction language concerning their alternative monetary policy actions. The EUR/USD should continue to benefit as long as the global economy recovers and investors exit the dollar from fear of inflation in the U.S. Therefore, it appears we are returning to pre-crisis norms of a weak dollar and pricey oil.
Looking over the EUR/GBP, this currency pair is threatening to making a very bearish move beneath December 08’ lows. Therefore, we could continue to see relative weakness in the Euro as compared to the Pound, making the GBP/USD a stronger currency for the time being. Despite our anticipation of upcoming consolidation EUR/USD, we maintain our bullish outlook trend wise due to the fundamental and technical moves made over the past few weeks.
Fundamentally, we find resistances of 1.4222, 1.4290, 1.4325, 1.4374, and 1.4432. To the downside, we see supports of 1.4187, 1.4117, 1.4078, 1.4024, and 1.3987. The 1.40 area serves as a psychological cushion with 1.45 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.4208.
Market Commentary provided by Fast Brokers.
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