{"id":3557,"date":"2009-08-31T10:28:03","date_gmt":"2009-08-31T15:28:03","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=3557"},"modified":"2009-08-31T10:28:03","modified_gmt":"2009-08-31T15:28:03","slug":"eurusd-edges-lower-despite-encouraging-flash-cpi","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/08\/31\/eurusd-edges-lower-despite-encouraging-flash-cpi\/","title":{"rendered":"EUR\/USD Edges Lower Despite Encouraging Flash CPI"},"content":{"rendered":"

By Fast Brokers<\/strong> – The EUR\/USD gave us a head-fake to the topside yesterday, instead deciding to submit to the downward force of its trading range.\u00a0 The EUR\/USD is fighting to stay above our 2nd tier uptrend line and previous bottom-end support of 1.4281 as investors digest the nearly -7% decline in China\u2019s SCI.\u00a0 The EUR\/USD\u2019s inability to charge past our 4th tier downtrend line despite solid buy-side volume is a bit disconcerting.\u00a0 However, the EUR\/USD continues to flex its relative strength after the EU\u2019s CPI Flash Estimate came in two basis points ahead of analyst expectations.\u00a0 The recovery in the EU\u2019s Flash CPI is a positive turn of events since spiraling prices have been the sore thumb in the EU\u2019s economic recovery.\u00a0 It will be interesting to see if the EU\u2019s PPI can register a similar stabilization once it rolls around.\u00a0 Even though the Flash CPI is showing improvement, EU prices continue to decline at a historic rate.\u00a0 However, today\u2019s reading could buy the ECB some more time as the central bank tries to avoid another injection of liquidity.\u00a0 The CPI number comes just in time since the ECB will be making a monetary policy decision on Thursday.\u00a0 Although analysts aren\u2019t expecting any further liquidity injections at this week\u2019s meeting, investors should still be on their toes since the ECB has been prone to deliver monetary shocks in the past.\u00a0 In fact, the ECB may be uncomfortable with the rate the Euro is appreciating against the Pound, and could be tempted to deliver a shock to depreciate the Euro a bit and level the playing field.<\/p>\n

Meanwhile, the EUR\/USD is right in the gut of the trading zone created by our trend lines.\u00a0 The EUR\/USD is relaying the message of a consolidating S&P.\u00a0 However, should the S&P futures follow the SCI lower, the EUR\/USD may have little choice but to drop back towards our 1st tier uptrend line.\u00a0\u00a0 On the other hand, we don\u2019t expect that investors will send the EUR\/USD through any significant technical areas until we receive the next couple sessions of EU data, including German Retail Sales and Unemployment Change on Tuesday and the EU\u2019s Revised GDP on Wednesday.\u00a0 If the EU\u2019s data comes in better than expected, investors may price in a neutral monetary stance at Thursday\u2019s ECB meeting by appreciating the Euro against the Dollar.\u00a0 We will see how the condition develops over the next 24-48 hours.<\/p>\n

We still believe our 4th tier downtrend line plays an important role to the topside, and investors should keep in mind the currency pair has been experiencing more buy-side than sell-side activity as of late.\u00a0 A majority of the EU economic data has been outpacing analyst expectations except for prices, which registered an about face today.\u00a0 Therefore, there is little reason to be fundamentally negative on the EUR\/USD right now.\u00a0 It would take a blatantly negative turn of events in both EU and U.S. economic data this week to send the EUR\/USD tumbling below our first tier uptrend line.\u00a0 Even if the EUR\/USD should decline below our 1st tier uptrend line, we can form several more trend lines beneath, not to mention the currency pair has its highly psychological 1.40 level hanging far below present price.\u00a0 As for the topside, our 4th tier downtrend line plays an important technical role along with 8\/27 highs.\u00a0 Meanwhile, the EUR\/USD is a leg up away from a substantial breakout since July highs are within reach.<\/p>\n

Present Price: 1.4288<\/p>\n

Resistances: 1.4297, 1.4310, 1.4327, 1.4340, 1.4360<\/p>\n

Supports: 1.4281, 1.4262, 1.4254, 1.439, 1.4219<\/p>\n

Psychological: 1.40, 1.45<\/p>\n

\"\"<\/a><\/p>\n

Market Commentary<\/strong><\/em> provided by Fast Brokers<\/strong><\/span><\/a>.<\/p>\n

Disclaimer:<\/strong> FastBrokers\u2019 market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell\/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n

Risk Disclosure:<\/strong> There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Fast Brokers – The EUR\/USD gave us a head-fake to the topside yesterday, instead deciding to submit to the downward force of its trading range.\u00a0 The EUR\/USD is fighting to stay above our 2nd tier uptrend line and previous bottom-end support of 1.4281 as investors digest the nearly -7% decline in China\u2019s SCI.\u00a0 The … <\/p>\n

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