By Fast Brokers – The EUR/USD is gravitating around the psychological 1.45 area as we suspected may happen. However, the EUR/USD is recovering quickly from losses earlier today by bouncing off of our 2nd tier uptrend line. Meanwhile, our 3rd tier uptrend line is reaching an inflection point with our makeshift 1st tier downtrend line. We say makeshift because the best we could do to form a downtrend line was to connect through last week’s highs. We notice interest is waning on the sell-side, and the lack of convincing downward momentum keeps the EUR/USD’s new near-term uptrend alive and well. The Euro’s relative strength is back in 1st gear with a large bounce taking place in the EUR/GBP. However, we find little reasoning behind the move since Britain’s economic data outperformed the EU’s last week. Perhaps are speculating the BoE may keep the gates of liquidity open.
The EU will gradually re-enter the econ. data headlines following a very quiet week. The first key release will be tomorrow’s ZEW Economic Sentiment data. Analysts are expecting continual improvement in sentiment regarding the EU’s economy. This wouldn’t be surprising considering the latest wave of econ. data from the EU was positive. Tomorrow’s ZEW data will be accompanied by employment data from Britain along with pricing data from the U.S. The FX markets sprung back to life last week after the official end to summer. We’ve seen volatility increase across the board and we expect price movements to pick up as Autumn nears. Last week’s breakout to the topside was a key technical movement, and we have little reason to alter our positive near-term outlook on the EUR/USD. A seismic reversal to the downside would require large setbacks in global economic data along with technically significant declines in U.S. equities. However, the global stimulus packages are still impacting the economy, so we don’t expect the legitimacy of the EUR/USD’s uptrend to be brought into question until 3rd quarter earnings season rolls around.
December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Meanwhile, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD’s medium-term uptrend is concerned.
Present Price: 1.4580
Resistances: 1.4591, 1.4607, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4494
Psychological: 1.45
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