By Fast Brokers – The EUR/USD is continuing its consolidative pattern despite sizable gains in gold. We recognize similar behavior in the GBP/USD and the EUR/GBP is moving sideways. Investors are digesting a wealth of news and data. Yesterday’s U.S. ADP number and Services PMI both printed slightly below expectations while EU Industrial New Orders also disappointed. Additionally, today the EU released a negative set of Retail Sales data. Hence, the global economic recovery continues to materialize at a sluggish pace in the West. As for the East, China raised new bond issues by 4 basis points and investors are taking this as a signal that China may be more conservative monetarily in 2010. Additionally, Australia’s Retail Sales came in hotter than anticipated. Therefore, the East continues to lead the global economic recovery. However, the U.S. did print an encouraging weekly Unemployment Claims number today, and attention remains focused on Friday’s headline Unemployment Rate and Employment Change releases. If tomorrow’s U.S. employment data impresses, we could see another leg down in the EUR/USD since this week’s EU data has been disappointing. On the other hand, discouraging employment data could add more weight to recent Fed Minutes hinting that the central bank is considering expanding its asset purchase program to keep the U.S. housing market afloat, a positive development for the EUR/USD. For the time being the theme continues to be Dollar strength.
Technically speaking, the EUR/USD still faces multiple downtrend lines along with the psychological 1.45 level, 1/05, 12/23, and 12/18 highs. Hence, some challenging near-term topside technicals are in place due to the EUR/USD’s downturn in December. As for the downside, the EUR/USD has technical cushions in the form of our 1st and 2nd tier uptrend lines along with intraday and 1/04 and 12/22 lows. The EUR/USD is still trading well below our 3rd tier uptrend line that runs through July lows, meaning the currency pair could be in for more losses over the medium-term towards the psychological 1.40 should U.S. data continue to outperform. On an encouraging note, the EUR/USD is setting higher lows, creating the possibility of a new base.
Present Price: 1.4343
Resistances: 1.4356, 1.4390, 1.4418, 1.4439, 1.4458, 1.4484
Supports: 1.4323, 1.4303, 1.4267, 1.4235, 1.4216
Psychological: 1.45, 1.40, December and September Lows
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Market Commentary provided by Fast Brokers.
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