By Fast Brokers – The EUR/USD is fighting to consolidate above Friday lows with the intention of a building a new base following last week’s heavy pullback. The EU’s GfK Consumer Confidence data printed roughly 10% below analyst expectations earlier in the session, sighting consumer concern over rising energy prices and high unemployment. Today’s setback in consumer confidence marks the 3rd straight drop from September highs. However, it remains to be seen whether the downturn in consumer confidence is a symptom of a slow recovery or the beginning for a more lasting contraction. While today’s weak GfK number would presumably result in further EUR/USD losses, the currency pair is holding up relatively well since U.S. Final GDP just printed 6 basis points below analyst expectations. Should U.S. Existing Home Sales also disappoint, then we may witness a broad-based pullback in the Dollar as confidence surrounding America’s economic recovery takes a bit of a hit. The EU will enter the data wire again tomorrow with the release of French Consumer Spending. However, investors will likely be focused on the BoE’s monetary policy minutes followed by U.S. New Home Sales and Personal Spending. That being said, we could witness some volatility in the FX markets due to a combination of key data releases and lower volume as investors take off for Christmas vacation.
Technically speaking, we’ve readjusted our downtrend lines to compensate for the EUR/USD’s most recent pullback. As we mentioned previously, if the currency pair doesn’t pop back above our 2nd tier uptrend line, we could be witnessing a technically significant reversal since our 2nd tier runs through July lows. Hence, the EUR/USD could be in the midst of a more protracted downturn towards the psychological 1.40 level. As for the topside, the EUR/USD faces multiple downtrend lines along with technical barriers in the form of the psychological 1.45 level and 12/16 highs.
Present Price: 1.4303
Resistances: 1.4316, 1.4335, 1.4365, 1.4386, 1.4412, 1.4430
Supports: 1.4286, 1.4266, 1.4249, 1.4232, 1.4217, 1.4205, 1.4187
Psychological: 1.45, 1.40, October Lows
Market Commentary provided by Fast Brokers.
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