By Fast Brokers – The EUR/USD is stabilizing around the 1.39 level as investors wait for America’s ISM Manufacturing PMI data. Consolidation in the EUR/USD is a desirable development for Dollar bears since the Euro has been in a freefall the past couple weeks. Investors were able to take the weekend to allow fears concerning Greece’s budget deficit to cool down a bit. It now appears the EU will need to make a decision in regards to bailing out Greece. The EU may have little choice but to lend a helping hand since the failure of an EU nation could have negative ramifications for the other member nations. An EU decision could come as soon as this week and it’s uncertain what impact this will have on the Euro. Therefore, investors should monitor the EU headlines closely since such an economic move could create volatility in the EUR/USD. Meanwhile, China’s Manufacturing PMI data printed a bit shy of analyst expectations and the UK’s outperformed. Hence, the risk trade has received a fuzzy picture to kick off the week. Investors are now awaiting America’s own PMI number and the release could elicit some activity. Volatility should pick up in the FX markets as the week progresses with the RBA making a monetary policy decision during tomorrow’s Asia trading session followed by U.S. Pending Home Sales. The EUR/USD will release German Retail Sales and investors are expecting growth of 0.9%. However, recent data from Germany hasn’t received too much of a response so focus will likely remain on the U.S. and Australia barring an EU decision regarding Greece.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with 1/29 and 1/28 highs. Furthermore, the psychological 1.40 level could serve as a technical barrier should it be tested. As for the downside, the EUR/USD has our 1st tier uptrend line serving as technical cushions along with previous January lows. The EUR/USD has more uptrend lines waiting in the distance, although they are sitting off screen right now. Our 1st and 2nd tier uptrend lines could carry some weight since they run through April 2009 lows. That being said, a failure of our 1st tier could send a fairly negative signal considering April 2009 lows are around the 1.30.
Present Price: 1.3909
Resistances: 1.3936, 1.3976, 1.4002, 1.4036, 1.4065, 1.4099
Supports: 1.3903, 1.3878, 1.3857, 1.3833, 1.3806, 1.3782
Psychological: 1.40, January lows
Market Commentary provided by Fast Brokers.
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