By Fast Brokers – The EUR/USD is consolidating back towards its psychological 1.25 level after the EUR/USD powered higher at the end of last week, nearly touching 1.27 as the currency pair tries to form a bottom. However, the EUR/USD’s rally did cool down a bit on Friday after the flash PMI data came in negative mixed and Germany Ifo Business Climate came in a tad shy of analyst estimates. Meanwhile, Asian equity markets are up today with the SCI leading the pack. This positive momentum could carry over into the European trading session due to the banking holiday. However, we naturally recommend investors keep an eye on the news wire since conditions in the EU are still unstable. Although gains from last week’s lows have been encouraging, the movement hasn’t been game changing thus far considering the extent of the downturn. Investors should also keep in mind how quickly the 5/7-5/10 pop deteriorated. Hence, it will be important to see the EUR/USD make a confirmation topside movement backed by convincing volume in order to turn the tide. It seems 1.25 is the key level in play right now with 1.30 hanging overhead. Attention is focused on China today with the U.S./China summit kicking off. However, it’s unlikely there will be any major agreement concerning currency appreciation emanating from the conference, meaning the meetings could have a limited impact on FX activity. Investors will also be looking at the U.S. today with Existing Home Sales data on deck.
Technically speaking, the EUR/USD faces multiple downtrend lines along with 5/21 and 5/12 highs. Additionally, 1.25 could now become a solid technical cushion for the near-term. As for the downside, the EUR/USD has supports in the form of intraday 5/21, and 5/20 lows along with the psychological 1.24 and 1.23 areas.
Present Price: 1.2523
Resistances: 1.2540, 1.2573, 1.2595, 1.2630, 1.2672, 1.2726
Supports: 1.2474, 1.2456, 1.2431, 1.2383, 1.2341, 1.2318
Psychological: May 2010 lows, April 2006 lows, 1.24, 1.25, 1.23, 1.27
(click chart to enlarge)
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