By Fast Brokers – The EUR/USD is rebounding past 1.40 despite weaker than expected industrial production numbers from both Germany and France over the past two sessions. Therefore, the EUR/USD is taking its cue from rising crude and S&P futures along with an appreciating Pound following Britain’s positive manufacturing production release. In fact, the EUR/GBP is falling beneath key lows meaning there could be accelerated losses in the near-term, exemplifying the relative weakness of the Euro. Even though volume to the upside has been weaker than to the downside over the past week, the EUR/USD is back above the psychological 1.40 level. This is an important step in the uptrend regaining its footing. However, the large volume we saw to the downside is still a bit disconcerting. We are not fazed by the volatility and will need a fundamental confirmation to the upside to feel comfortable with an optimistic outlook on the EUR/USD. The key test will be our 2nd tier downtrend line. If the EUR/USD can climb over the 2nd tier, we may see near-term gains accelerate past previous June highs. However, there is quite a ways to go.
While EU economic data continues to come in mixed, the S&P futures are knocking at 2009 highs. Therefore, despite the current negative tendency of the Euro, the EUR/USD is inclined to follow U.S. equities higher due to their positive correlation. Improvement in U.S. equities implies a recovery in the global economy, and consequently stabilization in the Euro zone’s economy. We may just not see as large of movements from the Euro to the upside for the time being.
Fundamentally, we find resistances of 1.4139, 1.4185, 1.4220, 1.4242, 1.4286, and 1.4325. To the downside, we see supports of 1.4105, 1.4056, 1.4020, 1.3964, and 1.3921. The 1.40 area serves as a psychological support with 1.45 acting as a psychological cushion. The EUR/USD is currently exchanging at 1.4110.
Market Commentary provided by Fast Brokers.
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