By Fast Brokers
The EUR/USD is popping up towards March highs, exploding from our 3rd tier downtrend line as anticipated. As we explained in our previous post, breaking through the 3rd tier was a key fundamental move. Therefore, the EUR/USD should continue enjoy its upward momentum, at least until the psychological 1.40 area. We wouldn’t be surprised to see the currency pair peak outside of March highs only to retrace in hesitation as bulls run out of steam. In fact, the present leg up isn’t enjoying the strong volume we saw before, meaning investors could take some profits soon, indicating a pullback with congestion.
The EU has no economic releases today, so the EUR/USD is feeding off of the Cable’s positive energy. The better than expected Manufacturing Production number out of Britain is exciting bulls, leading to a pop in both the EUR/USD and the S&P futures. The fact that the EUR/USD is tagging along for the ride is revealed by a sharp pullback in the EUR/GBP. Both the EUR/USD and GBP/USD have broken free of our last-resort downtrend lines, further supporting our bullish outlook. The EU region will remain relatively quiet on the news front until Friday, when it releases German Prelim GDP. Until then, the EUR/USD should tag along with the Cable and U.S. equities in a positive correlation while registering comparatively muted gains should all move to the upside.
Fundamentally, we find resistances of 1.3735, 1.3777, 1.3837, 1.3868, and 1.3918. To the downside, we see supports of 1.3702, 1.3674, 1.3646, 1.3626, and 1.3598. The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3695.
Market Commentary provided by Fast Brokers.
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