By Fast Brokers – The EUR/USD is edging higher, yet is experiencing little activity considering the solid U.S. Retail Sales data. Both the core and the headline topped analyst expectations. While one may be led to believe this would be a Dollar positive, the risk trade is benefitting a bit from today’s U.S. data set with the Aussie and Cable creeping higher. U.S. CPI came in a basis point below analyst expectations, showing inflation still isn’t a concern and this gives the Fed an opportunity to extend its loose monetary policy, a Dollar negative. The EU did release stronger than expected Industrial Production data today, yet the Pound is outperforming the Euro, exhibited by weakness in the EUR/GBP. Hence, there remains concern that the EU’s proposed financial assistance will not be sufficient enough to stabilize Greece. In fact, George Soros joined El-Erian today by cautioning that Greece still faces considerable economic headwinds. Hence, any upward momentum in the Euro is being contained at the moment and it seems there will have to be a positive psychological breakthrough to really turn the corner. Although the EU will be relatively quiet on the data wire again tomorrow, investors will receive a key data set from China, including GDP and CPI. This will be followed by important U.S. manufacturing data, meaning tomorrow’s trading session could experience heightened volatility. China will dominate the headlines, so investors should keep a close eye on the Dollar during the Asia trading session.
Technically speaking, the EUR/USD is continuing its consolidation pattern, meaning the near-term uptrend is still in play. However, there remain hefty downtrend forces weighing on the EUR/USD including multiple downtrend lines. The EUR/USD also faces technical barriers in the form of intraday and 4/12 highs. Additionally, the 1.37 area could serve as a psychological barrier should it be tested. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with 4/13 lows. The 1.35 level could serve as a solid support should it be reached.
Present Price: 1.3630
Resistances: 1.3642, 1.3655, 1.3663, 1.3675, 1.3685, 1.3692
Supports: 1.3622, 1.3614, 1.3605, 1.3597, 1.3586
Psychological: April and March highs, 1.35, 1.36, 1.37
(click chart to enlarge)
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