By Fast Brokers – The EU and IMF put together a nearly $1 trillion bailout package for struggling member countries and the ECB followed with an announcement it will purchase government bonds when deemed necessary. Hence, the EU brought a full-scale assault against speculators in an effort to counter last week’s collapse with an equally powerful stimulant. The EUR/USD responded well during the Asia trading session by surging back above 1.30. However, the currency pair is drifting back towards session lows as the euphoria wears off. Hence, although the rally from Thursday lows has been impressive, it’s possible the shock and awe campaign may have not been enough to jolt the EUR/USD out of its downturn. That being said, it will be important to see the EUR/USD stage another follow through rally over the next few days in order to establish a new uptrend. Even though the Euro isn’t responding quite as well as EU policy makers may have hoped, the European markets experienced an incredible rally, so it seems the bailout package may favor EU equities over the Euro currency. However, we’ll have to see how the week pans out first. An important gauge to watch may be German bond prices. If German bond yields climb higher this could weigh on the EUR/USD. The EU won’t release much noteworthy data until Wednesday’s German prelim GDP and EU Flash GDP figures, meaning the next 24 hours should be about the outlook regarding the effectiveness of the $1 trillion bailout. Additionally, China will release a solid data set tomorrow, including CPI and industrial production.
Technically speaking, the EUR/USD hasn’t been able to hold 1.30, a disconcerting technical near-term development. However, the currency pair is still trading well above Thursday lows, meaning a bottom could form from present levels. As for the topside, the EUR/USD faces a wealth of downtrend lines along with the psychological 1.30 level and intraday highs.
Present Price: 1.2839
Resistances: 1.2854, 1.2887, 1.2912, 1.2945, 1.2969, 1.2996
Supports: 1.2819, 1.2802, 1.2779, 1.2758, 1.2734, 1.2704
Psychological: May 2010 low, March 2009 lows, October 2008 lows, 1.28, 1.27, 1.26, 1.25
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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