By Fast Brokers – The EUR/USD is climbing above our 2nd tier uptrend line as it re-approaches the psychological 1.40 mark once again. The Euro is showing relative strength across the board after last week’s releases gave hope to the German and French economies. The Euro’s resilience is revealed in the encouraging performance of the EUR/GBP, which has stabilized above several of our near-term downtrend lines. It seems it’s the Euro’s turn to accelerate after several setbacks, and we believe the EUR/USD could have a little more room to run to the upside for the immediate term. However, the negative sentiment in the market hasn’t changed, meaning the overall momentum remains to the downside. Investors are getting for tomorrow with economic data picking back up and 2nd quarter earnings reports hitting the wires. The EUR/USD should maintain its relative strength for the coming week barring any large disappointments from the EU’s economic sentiment, industrial production, or CPI.
The EU will release important economic sentiment data along with industrial production on Tuesday. Investors are expecting to see a continual improvement in consumer sentiment as the number approaches 50, or the barrier between growth and contraction. Investors are also looking for as sharp reversal in industrial production from June’s reading of -1.9%. Expecting 1.5% may be setting the market up for disappointment since we’ve seen industrial production come in below the median analyst predictions for the past two months. In addition to key data points from the EU, the U.S. will release retail sales, PPI, and business inventories tomorrow. Therefore, considering we’re entering the beginning of the 2nd quarter earnings season, the EUR/USD has the potential to become volatile over the next few trading sessions.
The EUR/USD made some encouraging technical moves last week after bottoming out comfortably above June lows on July 8th . Since then, the EUR/USD has bounced off of our 1st tier uptrend line several times. Though the EUR/USD popped past 1.40 on July 9th, the currency pair has since retraced, and 1.40 continues to be a formidable foe to the upside. Hence, 1.40 and June 9th highs should serve as hefty immediate term obstacles. The EUR/USD may drift higher for the time being until our 3rd tier downtrend line reaches our 1.4065 resistance. Despite the positive near-term developments in the EUR/USD, we’ve seen volume declining steadily to the upside, meaning the EUR/USD’s run could top-out in the next day or two. As for the downside, any reversal below July 10 and/or July 8 lows on rising volume would raise a red flag.
Present Price: 1.3975
Resistances: 1.3991, 1.4020, 1.4050, 1.4065, 1.4091
Supports: 1.3970, 1.3944, 1.3915, 1.3889, 1.3865
Psychological: 1.40
Market Commentary provided by Fast Brokers.
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