By Fast Brokers – The EUR/USD added onto yesterday’s losses after the Dollar appreciated across the board in reaction to stronger than expected CPI and PPI data from China. Inflationary data in China indicates its central bank may be enticed to tighten liquidity further should prices continue to rise. The concept that China may press down on the breaks has raised concern recording global economic growth since China has been the engine behind the recovery. In addition to the data set from China, EU PMI data printed negatively mixed. Although Manufacturing came in line with analyst estimates, Services shrugged a couple points below estimates. More discouraging economic data from the EU gave investors ammo to sell off the EUR/USD despite the extent of the past few days. However, the EUR/USD is attempting to bottom right now as gold pops and the Dollar weakens across the board in reaction weekly U.S. Unemployment Claims coming in much higher than analyst expectations. The rise in claims has tempered enthusiasm surrounding America’s economic recovery, leading to speculation that liquidity will remain loose in the U.S., a Dollar negative. Meanwhile, markets could get political today with President Obama set to announce his proposal for new financial reforms. Should investors view the new reforms as a negative for banks this could lead investors to sell the Dollar. The EU will keep the data train rolling tomorrow with the release of Industrial New Orders and the Belgium NBB Business Climate. A positive data set could prove helpful in the EUR/USD setting a new bottom.
Technically speaking, the EUR/USD understandably face multiple downtrend lines considering the extent of its. However, our downtrend lines have quite a bit of space between them, meaning the Euro could gain back some ground should the Dollar experience broad-based weakness. As for the downside, we’ve placed a new 1st tier uptrend line running through intraday lows. Additionally, the EUR/USD does have the psychological 1.40 level serving as a technical cushion. The 1.40 area alone could prove to be enough of a psychological influence to allow the EUR/USD to calm and bottom out.
Present Price: 1.4104
Resistances: 1.4117, 1.4146, 1.4165, 1.4191, 1.4224, 1.4247
Supports: 1.4080, 1.4065, 1.4045, 1.4015, 1.3981, 1.3950
Psychological: 1.40
Market Commentary provided by Fast Brokers.
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