By Fast Brokers – The EUR/USD has bounced off intraday lows as the currency pair tries to calm down from what has been a volatile week and a half. In fact, trading has been so volatile that today’s 100bp+ trading range looks like consolidation. The EUR/USD is battling to avoid a retest of 5/6 lows and its psychological 1.25 level as investors react to news that Spain has announced a few austerity measures in order to reign in its budget deficit. Though the austerity measures aren’t an end-all solution, they’re a good start. Although U.S. equities are rallying on the news, Euro investors haven’t bought into the optimism, keeping the EUR/USD at bay. In addition to the positive news from Spain, German and EU prelim GDP data points both topped analyst expectations while industrial production picked up speed. Hence, EU fundamentals continue to improve as demand for exports increases with a weakening Euro. On the other hand, this data comes before last week’s collapse, so the bulls are restraining themselves for now. The EU will be on a banking holiday tomorrow, leaving movements in the EUR/USD up to present momentum and any game changing events from the UK or U.S.
Technically speaking, the EUR/USD clearly faces an uphill battle with a wealth of downtrend lines hanging over head. Additionally, the EUR/USD faces technical barriers in the form of intraday, 5/11, and 5/10 highs along with the psychological 1.28, 1.29, and 1.30 areas. As for the downside, the EUR/USD has a limited near-term support system in the form of intraday and 5/6 lows along with the psychological 1.26 and 1.25 levels.
Present Price: 1.2690
Resistances: 1.2704, 1.2734, 1.2758, 1.2779, 1.2807, 1.2819, 1.2854
Supports: 1.2671, 1.2652, 1.2622, 1.2603, 1.2581, 1.2521
Psychological: May 2010 lows, March 2009 lows, October 2008 lows, 1.28, 1.27, 1.26, 1.25
(click chart to enlarge)
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