By Fast Brokers – The EUR/USD staged a solid rally over the past 24 hours as investors returned to the risk trade with the lack of negative psychological forces. The EU later fed the rally by announcing it is backing Greece’s plan to get its fiscal house in order. However, it remains to be seen whether this is a sign of concrete support or a political move to give the Euro some psychological support. The risk trade has made a direct u-turn during the U.S. trading session after the headline U.S. ADP Non-Farm Employment Change number printed stronger than analyst expectations. In fact, the barometer almost registered jobs growth. On the downside, the ADP data revealed that announced layoffs increased significantly, taking a bit of the optimism out of the number. Either way, this data point has proven to be Dollar positive. Encouraging jobs data along with recent positive data releases has made the Dollar an ideal safe haven amidst global economic uncertainty. Furthermore, the fact that EU headline Retail Sales data printed 5 basis points below analyst expectations didn’t help matters either. Meanwhile, investors are awaiting America’s Services PMI data due shortly. An outperformance in Services data could give the Dollar another boost, whereas a negative could strengthen the EUR/USD from intraday lows. Activity should remain at a heightened state over the next 24 hours with the ECB and BoE making monetary policy decision on Thursday. It’s difficult to imagine the ECB will tighten liquidity considering the debt issues in Greece combined with recent underwhelming data. However, central bank statements usually move markets so investors should keep a sharp eye on behavior in the major Dollar crosses.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday, 1/29, and 1/28 highs. Furthermore, the psychological 1.40 level could serve as a technical barrier should it be retested. As for the downside, the EUR/USD has multiple uptrend line serving as technical cushions along with previous January lows. The EUR/USD has more uptrend lines waiting in the distance, although they are sitting off screen at the moment. Our 1st and 2nd tier uptrend lines could carry some weight since they run through April 2009 lows. That being said, a failure of our 1st tier could send a fairly negative signal considering April 2009 lows are around the 1.30.
Present Price: 1.3944
Resistances: 1.3974, 1.3999, 1.4026, 1.4056, 1.4101, 1.4136
Supports: 1.3931, 1.3906, 1.3878, 1.3857, 1.3833, 1.3806, 1.3782
Psychological: 1.40, January lows
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Market Commentary provided by Fast Brokers.
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