By Fast Brokers – The Euro is underperforming today and the EUR/USD has experienced a brisk leg down as fiscal concerns continue to weigh on the currency. George Soros reiterated his lack of confidence in the EU’s aid proposal for Greece. Statements are swirling that if Germany doesn’t step up and take more leadership the union could unravel. While this is all purely hypothetical, negative comments are dragging on the Euro none the less as the EUR/GBP declines. Meanwhile, solid GDP and Industrial Production data from China failed to boost the risk trade as the rest of the major Dollar pairs move sideways. U.S. manufacturing data is improving faster than anticipated while unemployment claims remain at an uncomfortably high level. Hence, the markets are receiving a mixed picture today, denting the positive momentum from yesterday’s solid topside rally. Investors should keep their eyes on the news wire as U.S. earnings reports start to stream in. As we’ve seen from activity earlier this week, positive U.S. earnings could bode well for the risk trade. The EU will release CPI data tomorrow and it will be interesting to see how prices are behaving in the union right now considering all of the recent turmoil in Greece. However, even if the CPI comes in stronger than anticipated the ECB would likely find it difficult to tighten due to all of the fiscal uncertainty within the region. Hence, tomorrow’s trading session will likely be about U.S. Building Permits and Prelim Michigan data. Stronger than expected U.S. data could weigh on the EUR/USD, particularly if EU psychologicals don’t improve soon.
Technically speaking, the EUR/USD has taken a step backward by dropping below 4/13 lows. However, the currency pair has avoided a retest of the highly psychological 1.35 level thus far and the uptrend still has a solid support system in place, including multiple uptrend lines. As for the topside, near-term downtrend lines are accumulating slowly while the EUR/USD also faces technical barriers in the form of 4/13 and 4/14 highs.
Present Price: 1.3550
Resistances: 1.3559, 1.3567, 1.3576, 1.3586, 1.3591, 1.3603
Supports: 1.3544, 1.3532, 1.3520, 1.3513, 1.3503, 1.3495
Psychological: April and March highs, 1.35, 1.36, 1.37
(click chart to enlarge)
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