By Fast Brokers – The Cable has been tossed below 3/22 lows amid risk aversion stemming from continued uncertainty in the EU. Investors initially sent the Euro lower with IMF involvement in Greece’s rescue becoming more likely. The rest of the risk trade followed suit after Fitch downgraded Portugal, igniting speculation that fiscal woes are just the tip of the iceberg with the possibility of contagion on the horizon. The concept of more PIIGS nations being hit by credit woes instinctively sent investors to the Dollar for safety, knocking the Cable despite a lack of economic data from the UK. However, the Cable is fighting to stabilize a bit as Darling delivers the UK’s 2010 budget. Should the projected 2010 budget deficit come in lower than anticipated, this could help buoy the Cable a bit despite thunderstorms in the EU. The Cable does still have previous March lows in place, meaning the currency pair appears to have stronger near-term support than the EUR/USD, which just experienced a hefty technical setback. Meanwhile, the U.S. has New Home Sales data on the way, and a better than expected result could strengthen the Dollar further, while a weak number could help stabilize the Cable. The U.S. also released DGO data this morning which printed mixed, indicating U.S. consumption is recovering slowly. For the time being, it will be interesting to see how investors react to the UK’s 2010 budget plans as investors dissect Darlin’s address throughout the trading session. The UK will release Retail Sales data tomorrow along with a few EU and U.S. figures. However, attention will likely be honed in on the EU’s meeting and any possible solutions for how to handle Greece.
Technically speaking, although near-term supports are certainly wearing thin, the Cable still has 3/10 and 3/2 lows working in its favor. As for the topside, the Cable clearly faces multiple downtrend lines along with the psychological 1.50 level should it be tested.
Present Price: 1.4924
Resistances: 1.4928, 1.4936, 1.4946, 1.4954, 1.4967
Supports: 1.4914, 1.4901, 1.4893, 1.4878, 1.4871
Psychological: 1.50, March lows
(click chart to enlarge)
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