EUR/USD Bounces Following Retracement Below Feb Lows

The EUR/USD is bouncing higher after falling beneath February lows.  We recognize positive price movement across the board, particularly in gold and the Aussie.  Such activity is likely due to a combination of oversold conditions and the 25 basis point hike by the RBA.  The RBA’s decision to pursue its hawkish monetary policy is a boost for the risk trade with Australia’s economic fundamentals on track.  However, uncertainty is still hanging over the EU and UK, meaning downward pressures could kick in at any moment should negative debt-associated events occur.  The ECB does have a monetary policy decision to make on Thursday.  It’s difficult to imagine the ECB exhibiting a tight monetary policy stance considering Greece’s fiscal problems.  Additionally, EU Flash CPI printed at 0.9%, a basis point below analyst expectations today.  Hence, lagging price growth gives the ECB some breathing room to exert a looser policy stance.  Meanwhile, it will be interesting to see whether the EUR/USD can continue to hold its ground and build a base around 1.35.  The EU will release Retail Sales data tomorrow.  However, attention will likely be centered on the U.S. and UK with UK HPI and Services PMI data along with U.S. Services PMI and ADP Non-Farm Employment Change releases.  U.S. employment data could prove to be the real market mover.  Although, investors should keep in mind that the ADP number has been known to be unreliable in the past, and more emphasis will likely be placed on the headline figure on Friday.  Regardless, activity could pick up with key data releases and monetary policy decisions on the way.

Technically speaking, the EUR/USD faces multiple downtrend lines along with 2/26, 2/23, and 2/17 highs.  As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with intraday lows.  Meanwhile, the psychological 1.35 area could continue to have an impact on price movements.

Present Price: 1.3588

Resistances: 1.3599, 1.3634, 1.3654, 1.3676, 1.3694, 1.3721

Supports:  1.3573, 1.3520, 1.3493, 1.3460, 1.3438, 1.3420

Psychological: March Lows, 1.35

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.