By Fast Brokers – The EUR/USD has eased after breaking through previous March highs during the Asia trading session. The EUR/USD participated in the risk rally stemming from the Fed’s decision to maintain its loose monetary policy for the foreseeable future. The central bank’s continued dovish language prompted a pullback across the board. The EUR/USD also derived some of its upward momentum from Standard & Poor’s removing Greece from its watch list and reaffirmed the country’s BBB+ credit rating in the process. All that being said, the EUR/USD hasn’t logged the type of gains over the past 24 hours as we’ve seen in the Cable and Aussie. The Euro’s relative weakness is highlighted by today’s hefty pullback in the EUR/GBP. The EUR/USD’s upward momentum is likely being restrained by the lack of details provided by the EU’s finance ministers in regards to their plan for extending a lifeline to Greece should the nation’s fiscal situation deteriorate further. Regardless, the EUR/USD did climb through what are now our 1st and 2nd tier downtrend lines, which run through the 1.3950 area. Hence, technicals are beginning to work in favor of the EUR/USD’s medium-term outlook. The EU will be relatively quiet on the data front tomorrow despite the Current Account figure. Therefore, investors will likely remain focused on the U.S. with Chairman Bernanke’s testimony due later today. The U.S. will also release CPI and weekly Unemployment Claims data tomorrow. Should CPI come in light like today’s PPI while Unemployment Claims hover around 450k, this could benefit the risk trade in anticipation that the Fed will continue to pump liquidity into the U.S. economy, thereby weakening the Dollar.
Technically speaking, the EUR/USD faces multiple downtrend lines along with intraday and 3/12 highs. The EUR/USD has separated from our 1st tier downtrend line again, which runs through previous 2010 highs, or the 1.4575 area. Hence, techincals could be pointing in favor of a longer-term uptrend in the making. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/15 and 3/10 lows. Meanwhile, the psychological 1.35 area is still serving a technical cushion while 1.40 serves as a key psychological barrier.
Present Price: 1.3762
Resistances: 1.3775, 1.3796, 1.3814, 1.3835, 1.3853, 1.3882
Supports: 1.3756, 1.3736, 1.3725, 1.3713, 1.3695, 1.3670
Psychological: March and February Lows, 1.35, 1.40, February highs
(click chart to enlarge)
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