By Fast Brokers – The EUR/USD continued its slide yesterday, breaking below May lows before bouncing after the risk trade reacted positively to America’s data set. U.S. construction spending surged, giving investors hope that America’s economic recovery is becoming entrenched. We saw a strong intraday rally in most major dollar pairs, though the EUR/USD’s upward momentum has faded and the currency pair is gravitating back towards 1.22. The level of uncertainty concerning the EU hasn’t changed and investors are likely just waiting for the next ball to drop. The EU will be relatively quiet on the data wire today, leaving the markets up to U.S. pending home sales and psychological forces. Speaking of which, it will be interesting to see how Hatoyama’s resignation affects the FX markets as a whole. Political instability in Japan could dent the risk trade and drag the EUR/USD lower. Also, investors should keep a close eye on the news wire for these days it is wises to expect the unexpected.
Technically speaking, the EUR/USD faces technical barriers in the form of mounting downtrend lines along with 6/1 and 5/28 highs. Additionally, the 1.25 level could serve as a strong resistance should it be tested. As for the downside, yesterday’s break below May lows could prove to be an important technical event for the near-term. The EUR/USD has supports in the form of 6/1 lows and the highly psychological 1.20 area.
Present Price: 1.2235
Resistances: 1.2251, 1.2268, 1.2284, 1.2304, 1.2320, 1.2344, 1.2373
Supports: 1.2232, 1.2221, 1.2208, 1.2196, 1.2176, 1.2150, 1.2120
Psychological: June 2010 lows, March 2006 lows, 1.22, 1.20
(click chart to enlarge)
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