By Fast Brokers – Greek bond yields surged to a record high today as uncertainty grows that Greece will not be able to attain sufficient funding on its own. Additionally, recent vocal displeasure with the IMF’s planned austerity measures should aide be sought has rumor mills churning. However, regardless of today’s disconcerting drop in Greek bond prices the EUR/USD has manage to avoid a retest of March lows. That being said, investors should keep an eye on the currency pair since downward pressure is building from this week’s negative psychological developments. The EUR/USD’s intraday recovery is likely due to a combination of Trichet’s belief that Greece will be able to solve its own fiscal problems without EU and IMF intervention. Additionally, U.S. weekly Unemployment Claims came in higher than anticipated, souring optimism in the Dollar and effectively buoying the EUR/USD. Today’s resilience in the EUR/USD is even more impressive considering EU Retail Sales and German Industrial Production both printed below analyst expectations. Hence, a weakening Euro could be stoking inflation, thereby reducing consumption. The data wire will be relatively quiet in both the EU and the U.S. tomorrow, meaning psychological elements could continue to dominate price movements over the near-term. As a result, investors should keep tuned to the news wire for any new developments in Greece and the EU at large.
Technically speaking, the EUR/USD has March lows and the psychological 1.33 and 1.32 areas serving as technical cushions. However, should March lows give way the EUR/USD could slide into another large leg down. As for the topside, the EUR/USD now faces mounting downtrend lines due to the currency pair’s decisive pullback since the beginning of this month. The EUR/USD also faces technical barriers in the form of 4/7 highs and the psychological 1.34 area should it be tested.
Present Price: 1.3333
Resistances: 1.3339, 1.3346, 1.3352, 1.3363, 1.3374, 1.3383
Supports: 1.3332, 1.3322, 1.3312, 1.3305, 1.3300, 1.33292
Psychological: March lows, 1.35, 1.34, 1.33
(click chart to enlarge)
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