By Fast Brokers – The EUR/USD is continuing yesterday’s pullback as uncertainty continues to build regarding rising bond yields in Greece. Politicians have been relatively quiet since yesterday’s statement implying Greece’s objection to IMF involvement in potential financial aid packages due to the apparent extremity of requested austerity measures. Unraveling conditions in Greece have sent investors back towards the dollar, gold, and higher yielding currencies such as the Aussie and Loonie. The EU also gave investors little to cheer about data-wise after Final GDP and PPI each printed a basis point below expectations. Hence, it seems problems in the Mediterranean are impacting the EU as a whole as the union tries to contain Greece’s fiscal crisis and prevent contagion. Meanwhile, the U.S. will be relatively quiet on the data wire today, leaving the EUR/USD up to its present trend and any unforeseen psychological developments. On an encouraging note, the EUR/USD is still trading above March lows, meaning an uptrend may still be salvageable. However, it seems investors will need more clarification from EU officials soon. Investors will then turn their attention to tomorrow’s busy lineup. Investors will receive key economic data from Australia in the morning, followed by ECB and BoE monetary policy decisions during the afternoon. It is hard to imagine the ECB will tighten considering the damage being done to the region by fiscal problems in Greece. However, if the central bank were to tighten liquidity this could give the EUR/USD a boost to the topside. On the other hand, if the ECB were to loosen to support the economic recovery this could place downward pressure on the EUR/USD with a possible retest of March lows. Either way, tomorrow could be a busy day in the FX markets considering the wealth of news and data on the way.
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: 1.3353
Resistances: 1.3363, 1.3374, 1.3383, 1.3395, 1.3403, 1.3411
Supports: 1.3352, 1.3346, 1.3339, 1.3331, 1.3322, 1.3312
Psychological: March lows, 1.35, 1.34, 1.33
(click chart to enlarge)
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