By Fast Brokers – The Selloff in the EUR/USD and the risk trade continued yesterday. Investors are still concerned about the ability for Greece to enact its fiscal austerity along with debt worries in other Mediterranean nations. Additionally, the Fed shocked markets by raising its discount rate by 25 basis points, signaling that the emergency window may be closing. Investors reacted by buying up the Dollar across the board, sending the Euro below its highly psychological 1.35 level. However, the Euro is bouncing from intraday lows after the EU Flash PMI data set printed mix. Although services production slipped across the board and France slowed altogether, manufacturing in Germany shot up from 53.7 to 57.1, eclipsing analyst estimates of 54.1. Additionally, Germany’s PPI grew the most since August 2008 while the EU’s Account Balance rose for only the 2nd time since the inception of the economic crisis. Hence, it seems demand for German manufactured goods is climbing, leading to an increase in exports and consequently a positive Current Account. Although today’s data does show the EU’s economic recovery is slowing, Germany provided a silver lining and is giving investors a reason to support the Euro after heavy declines. The change in sentiment is reflected in a large move higher by the EUR/GBP as investors react to discouraging UK Retail Sales data. Meanwhile, investors are awaiting U.S. CPI data. We’ve seen prices rise across the globe and it wouldn’t be surprising if U.S. consumer prices also outpaced expectations. In fact, the Fed could have raised rates at the discount window in advance of such a turn of events, but we will have to see. Investors should also keep an eye on how U.S. equities react to the Fed’s decision to lift the discount rate since it occurred after the close yesterday.
Technically speaking, we’ve formed some new uptrend lines for the EUR/USD and the 1.35 area could serve as a technical cushion for the time being. As for the topside, the currency pair faces multiple downtrend lines along with 2/12 lows and 2/18 highs should they be reached. That being said, the EUR/USD is in blue territory due to the lack of near-term activity in this area to serve as technical levels. Hence, the EUR/USD could continue to fluctuate wildly until establishing a new range.
Present Price: 1.3517
Resistances: 1.3532, 1.3543, 1.3559, 1.3570, 1.3582, 1.3592
Supports: 1.3509, 1.3486, 1.3473, 1.3456, 1.3440
Psychological: February lows, 1.35
Market Commentary provided by Fast Brokers.
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