By Fast Brokers – The EUR/USD is extending yesterday’s pullback after the ECB kept its monetary policy unchanged as analysts estimated. German Factory Orders printed -2.5% below analyst expectations, adding downward pressure on the EUR/USD. Investors are also digesting a skyrocketing unemployment rate in New Zealand along with a slight pop in U.S. Unemployment Claims. Hence, negative economic indicators continue to flash around the globe and the Dollar is benefitting as investors route the risk trade. Furthermore, investors should keep in mind that U.S. economic data has been altogether positive before today’s set, so the Dollar has become an ideal hiding place amidst uncertainty. Meanwhile, we recognize a huge bar down in gold, confirming the negative sentiment regarding the risk trade since the precious metal is negatively correlated with the Dollar. Although the EU will release German Industrial Production tomorrow, focus will be on the U.S. with Non-Farm Employment Change and the official Unemployment Rate on the way. Therefore, volatility in the major Dollar pairs could remain at a heightened state as the week comes to a close. It seems like the Dollar is in a win-win situation these days since negative global developments leads investors to the Greenback for safety, whereas positive economic data leads investors to prefer the Dollar over currencies such as the Euro and Pound. Hence, the EUR/USD could remain under pressure until either EU economic fundamentals turn around or the debt situation in Greece is cleared up.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday, 2/1, and 2/3 highs. As for the downside, we’ve created a few new uptrend lines to serve as technical cushions along with previous June 2009 lows. On a negative note, our uptrend lines now run through February levels, or the 1.27 area. Hence, the EUR/USD’s downturn this month could signal a more lasting, medium-term decline.
Present Price: 1.3805
Resistances: 1.3833, 1.3857, 1.3878, 1.3896, 1.3916, 1.3938
Supports: 1.3806, 1.3782, 1.3757, 1.3737, 1.3689
Psychological: June 2009 lows
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Market Commentary provided by Fast Brokers.
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