By Fast Brokers – The EUR/USD is pulling back after U.S. Unemployment Claims came in at 440k, 20k below analyst estimates. The stronger than expected U.S. employment data is sending investors towards the Dollar as an EU resolution for Greece becomes more certain. Although the details of the plan haven’t been revealed yet, the Euro seems to be selling off on the news since the concept of EU relief was priced into the currency earlier this week. Meanwhile, we notice a pullback in gold as well, indicating that investors are opting to be risk-averse right now. On that note, the risk trade did receive a bit of good news during the Asia trading session. Australian employment data printed stronger than analyst expectations and China’s CPI data was cooler than estimates. Hence, the RBA has more incentive to maintain a tight monetary stance while China may feel less pressure to tighten liquidity at this point in time. Both developments are positive for the risk trade. However, debt issues in the EU have ignited investor uncertainty which is bearing down on risk right now. Although the EU has been quiet on the economic data front this week, it will reenter the fray tomorrow by releasing German Prelim GDP along with EU Flash GDP and Industrial Production. Strong economic data could help the EUR/USD regain its footing whereas a weak showing could lead to a retest of February lows. Meanwhile, investors should keep an eye on broad-based activity in the Dollar and gold as investors digest the EU’s decision to aid Greece.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday and 2/9 highs. Our 2nd tier could carry some weight since it runs through 2/3 highs and the 1.40 area. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with 2/5 lows and the psychological 1.35 level should it be tested.
Present Price: 1.3670
Resistances: 1.3693, 1.3721, 1.3744, 1.3773, 1.3806, 1.3841
Supports: 1.3640, 1.3610, 1.3587, 1.3563, 1.3533, 1.35
Psychological: February highs and lows, 1.35
(click chart to enlarge)
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