By Fast Brokers – The EUR/USD is strengthening a bit as investors await the Fed’s monetary policy decision later today. EU Flash PMI printed positively mixed earlier in today’s session, indicating the recovery in services and manufacturing remains on track. However, gains in the EUR/USD are being tempered by weaker than expected EU CPI data. The Core CPI figure was particularly troubling since the 1% growth rate is the weakest we’ve seen since the inception of the economic crisis. Hence, we aren’t seeing the pickup in prices in the EU as we’ve witnessed lately in the U.S. and UK, likely due to the EU’s tighter monetary policy. That being said, the decline in EU CPI could discourage the ECB from removing its alternative liquidity measures too soon. Investors are sending the EUR/GBP reeling lower in reaction to the combination of discouraging EU CPI and much better than expected UK CCC data. Regardless, all eyes remain on the Fed and upcoming U.S. CPI and Building Permits data. Should U.S. data print better than expected, we could witness an intraday reversal in the EUR/USD. However, the Fed’s monetary policy statement will likely be the highlight of the session since investors will be looking to see if the central bank has turned hawkish in reaction to recent positive unemployment and consumption data. If the Fed downplays recent data improvements and maintains its monetary policy stance as expected, investors may opt to buoy the EUR/USD and keep the currency pair above October lows.
Technically speaking, the EUR/USD found support on its psychological 1.45 level as we anticipated. However, the currency pair is still trading well below our 2nd tier uptrend line, suggesting we could see a retracement towards our 1st tier uptrend line (off chart), which is sitting around 1.4415 right now, if conditions don’t improve soon. The EUR/USD also has a technical cushion in the form of October lows. As for the topside, the EUR/USD faces multiple downtrend lines along with technical barriers in the form of 12/14 and 12/9 highs.
Present Price: 1.4562
Resistances: 1.4573, 1.4588, 1.4600, 1.4617, 1.4634, 1.4647
Supports: 1.4556, 1.4528, 1.4514, 1.4501, 1.4483, 1.4467, 1.4444
Psychological: 1.45, 1.40, 1.50, October Lows
Market Commentary provided by Fast Brokers.
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