By Fast Brokers – The Dollar’s odd, negative reaction to Friday’s surge in the U.S. Unemployment Rate has carried through strongly into Monday’s session. We’re seeing broad-based Dollar weakness as well as a gold breaking through its psychological $1100/oz level. Additionally, the S&P futures are trading up by nearly 1% pre-market, likely a reaction to the weakening Greenback. Friday’s discouraging U.S. unemployment data supported the belief that the Fed will not be able to tighten liquidity for quite some time. In fact, this weekend’s G20 meeting concluded with the group of nations stating they will keep the liquidity flowing until further confirmation of an economic recovery. Such unity hasn’t been seen since all of the central banks acted together when reducing rates and implementing their respective stimulus packages. This statement of solidarity is renewing investor confidence which has been struck by recent speculation that more central banks will follow Australia’s lead. As a result, investors are feeling more comfortable about getting back into riskier vehicles, and the EUR/USD is clearly reaping some of the benefits.
The EUR/USD is also being driven higher by impressive Industrial Production data from Germany (2.7% vs 1.2% expected). Investors will receive ZEW Economic Sentiment tomorrow. Should the ZEW data print better than expected, the EUR/USD might have enough momentum to carry though 1.50 and October highs. Technically speaking, the psychological 1.50 area proved to be a worth psychological barrier back in October. Therefore, it will be interesting to see how the currency pair interacts with 1.50 this time around. Meanwhile, the EUR/USD could be on the cusp of a more extensive topside breakout considering how close the currency pair is trading to our new 2nd and 3rd tier downtrend lines. These downtrend lines run through October highs. Hence, investors should keep a close eye on these trend lines since a movement beyond these barriers could indicate heightened upward momentum for the immediate-term. As for the downside, we’ve shifted our downtrend lines to compensate for today’s topside activity. The EUR/USD still has multiple uptrend lines serving as technical cushions to go along with intraday and 11/6 lows.
Present Price: 1.5001
Resistances: 1.5013, 1.5036, 1.5049, 1.5062, 1.5085, 1.5127, 1.5146
Supports: 1.4994, 1.4983, 1.4966, 1.4947, 1.4927, 1.4909, 1.4895
Psychological: 1.50, October Highs
Market Commentary provided by Fast Brokers.
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