By Fast Brokers – The EUR/USD is fluctuating above Monday lows as investors digest the EU’s plan to take a wait and see approach with Greece. The finance ministers have decided to give Greece a 30-day window to prove it can implement its plan to reduce its outstanding debt. If Greece’s actions prove insufficient, the ministers hinted they may apply further debt-reduction measures. In all, the EU is choosing to give Greece a chance while allowing financial markets to settle. However, should the situation go awry volatility could return quickly. Therefore, the EU is leaving itself a bit exposed by choosing a more passive approach to dealing with the situation. On the other hand, should Greek bond yields calm in the next 30-days and the EU approve of the government’s austerity actions this could provide a boost of confidence to the Euro. In addition to today’s news concerning Greece, EU economic sentiment data printed mixed. Although Germany’s economic sentiment number came in stronger than anticipated, the headline EU figure disappointed. Hence, although confidence concerning Germany’s economy is holding strong, debt concerns in Greece, Portugal and Spain are clearly weighing on the EU region. Meanwhile, investors are awaiting the Empire Manufacturing Index and TIC Long-Term Purchases data from the U.S. It will be interesting to see whether the EUR/USD can continue to consolidate and even build some upward momentum considering the FX market volatility as of late. On a positive note, the EUR/USD is within striking range of our 3rd tier downtrend line which runs through February highs, or the 1.40 area. Hence, a large positive shift in investor sentiment has the capability of yielding some strong near-term gains in the EUR/USD. However, debt concerns continue to weigh on the Euro for the time being/
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday, 2/8 and 2/11 highs. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with 2/15 and 2/12 lows and the psychological 1.35 level should it be tested.
Present Price: 1.3650
Resistances: 1.3664, 1.3693, 1.3721, 1.3747, 1.3766, 1.3799
Supports: 1.3639, 1.3617, 1.3592, 1.3577, 1.3550, 1.3526
Psychological: February highs and lows, 1.35
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