EUR/USD Drifts Lower with Light News

The EUR/USD is drifting lower today after the currency pair was unable to break through previous March highs during yesterday’s run higher.  The data wire has been relatively quiet the last couple trading sessions, yet investors are opting to retreat from the risk trade regardless.  Both Moody’s and Fitch cautioned that the UK’s financials are still not in a healthy position, likely yielding today’s downturn in the risk trade.  German Industrial Production printed 5 basis points below analyst expectations, though the result isn’t too bad to get worked up over.  Meanwhile, Sarkozy issued a statement defending Greece and implied that the EU will find means of supporting the country if deemed necessary.  However, Sarkozy’s vote of confidence hasn’t yielded the kind of impact one may expect on the EUR/USD even if the Euro is outperforming the Pound.   The story now becomes whether the EUR/USD can continue to hold above March and February lows despite current selling pressure.  The data wire will begin to heat back up during tomorrow’s Asia trading session with China’s New Loans and Trade Balance due.  Additionally, the EU will print France’s Industrial Production data.  China will likely dominate the headlines and continued strong performance could give the risk trade a jolt to the topside.  Meanwhile, the EUR/USD’s focus remains monthly lows and its psychological 1.35 level.

Technically speaking, the EUR/USD faces multiple downtrend lines along with 3/8 and 3/3 highs.  As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/5 and 3/2 lows.  Meanwhile, the psychological 1.35 area could continue to have an impact on price movements.

Present Price: 1.3554

Resistances: 1.3557, 1.3574, 1.3589, 1.3606, 1.3619, 1.3654

Supports:  1.3542, 1.3528, 1.3511, 1.3494, 1.3460, 1.3436

Psychological: March and February Lows, 1.35

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