By Fast Brokers – Investors have brushed aside this morning’s RBA rate raise and are punishing the Euro amid new negative psychological pressures coming from Greece. Greek government officials are becoming vocal about their desire to restructure the EU’s recent financial aid agreement. It seems Greece is unhappy with the terms and conditions the IMF is proposing should it be called upon to intervene. Hence, we may see a push from Greece to exclude the IMF from any rescue packages. However, conceding IMF involvement is what brought Germany to the table, so it’s difficult to believe they are willing to comply with Greece’s request. Either way, Greece’s vocal disapproval has cast the effectiveness of the aid proposal into doubt, renewing uncertainty regarding fiscal issues in the EU. Greek bond prices are dropping and yields rising as investors demand a premium for purchasing the nation’s debt. Therefore, it wouldn’t be surprising to see negative chatter return should bond yields climb higher. The Euro is continuing to underperform the Pound, highlighted by the EUR/GBP’s downturn. The EU reported only limited data today, showing psychological forces are in control for the time being. With U.S. economic data outperforming and uncertainty in the EU returning, it’s understandable that investors are selling EUR/USD. The data wire will remain quiet until this afternoon’s release of the FOMC Meeting Minutes. Hence, psychological forces could continue to drive the markets. Germany will release Factory Orders tomorrow, though investors will likely remain focused on news concerning Greece. Thursday’s ECB and BoE monetary policy meetings will highlight the week with the BoJ meeting tomorrow as well. Therefore, investors should expect volatility to pick up as the trading week progresses.
Technically speaking, the EUR/USD has dropped back below 3/31 lows, a negative development. However, the currency pair does have multiple uptrend lines to fall back on along with the psychological 1.33 level and March lows. However, the EUR/USD has certainly been dealt a damaging near-term blow. As for the topside, downtrends are mounting as the EUR/USD drops. Additionally, the currency pair faces technical barriers in the form of intraday highs and the psychological 1.34 and 1.35 levels should they be tested.
Present Price: 1.3364
Resistances: 1.3374, 1.3383, 1.3395, 1.3403, 1.3411, 1.3422
Supports: 1.3363, 1.3352, 1.3346, 1.3339, 1.3331, 1.3322
Psychological: March lows, 1.35, 1.34, 1.33
(click chart to enlarge)
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