By Fast Brokers – The EUR/USD has taken a step lower to start off the week, testing its psychological 1.32 level despite an agreement being reached in which the EU and IMF will provide Greece with roughly $150 billion over 3 years so long as austerity measures are implemented. Investors are reacting with speculation since some believe the plan is too little too late and won’t prevent contagion. However, the aid package could prove helpful for the Euro over the near to medium term since it takes some of the pressure off of the EU region and it will take time to deduce whether the financial measures are sufficient in preventing a Greek tragedy. Meanwhile, it will be interesting to see how bond yields behave not only in Greece, but the other PIIGS nations as well. If bonds rise and yields head lower then downward pressure on the EUR/USD may ease. Investors should keep in mind that EU data was fairly encouraging during the month of April and may otherwise have resulted in sufficient gains in the Euro if it wasn’t for Greece’s fiscal problems. On the other hands should yields remain at an abnormally high level and the financial aid proves unsuccessful then the downtrend could take hold of the EUR/USD with a vengeance. Although the data wire is relatively quiet today, activity should really pick up as the week progresses. The ECB will have its monetary policy meeting on Thursday along with the UK’s parliamentary elections. Investors will also receive key employment data from the U.S. As usual, there also remains the potential for a psychological flare, meaning investors should stay on their toes. Either way, this could prove to be a very eventful trading week.
Technically speaking, the EUR/USD faces mounting downtrend lines along with intraday and 4/27 highs. Additionally, the psychological 1.33 and 1.34 levels could continue to serve as a psychological barrier over the near-term. As for the downside, the EUR/USD has April 2010 and May 2009 lows serving as technical cushions along with the
psychological 1.32, 1.31 and 1.30 trading zones.
Present Price: 1.3246
Resistances: 1.3251, 1.3269, 1.3295, 1.3311, 1.3326, 1.3347
Supports: 1.3219, 1.3208, 1.3184, 1.3165, 1.3144, 1.3114
Psychological: April highs and lows, May 2009 lows, 1.33, 1.32, 1.31, 1.30
(click chart to enlarge)
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