By Fast Brokers – The EUR/USD popped back above 1.23 yesterday as U.S. equities soared and investors made a return to risk across the board. News spread that Jim Rogers bought up the Euro on Friday and Monday, signaling that big money is making its way back into European markets on the premise of oversold conditions. However, in an interview with CNBC Rogers also hinted that he is not sure if this is just a technical bounce or a fundamental shift, meaning the big money could shift elsewhere should conditions deteriorate again. In all, investors have been encouraged by the consistent rally from June lows and have shrugged off bad news this week. EU economic sentiment plunged last week and this could be the beginning of the downturn in economic fundamentals stemming from the fiscal woes in the union. However, the EUR/USD barely blinked an eye, suggesting a lot of damage has already been priced into the currency pair. Spain is under watch again today as Spanish and Portugal bond yields widen from the German Bund. Additionally, rumors spread that the IMF and U.S. are working on a $350 billion line of credit for Spain. The Spanish government has vehemently denied the report, though the development should certainly be taken note of. Meanwhile, EU CPI printed in line with analyst estimates and remains comfortably below the closely watched 3% level. Therefore, the ECB has more wiggle room to keep liquidity loose to bolster struggling union members. The EU will be quiet on the data wire tomorrow so all eyes will be on key U.S. releases, including CPI, the Philly Index, and weekly unemployment claims. Investors should also keep a sharp eye on the EU news wires since this is the second time we have heard rumors about Spain needing liquidity and it’s possibly rumors could turn to fact.
Technically speaking, the EUR/USD still faces downtrend lines, though the near-term barriers are withering. The EUR/USD does face topside obstacles in the form of intraday and 5/28 highs. Additionally, the psychological 1.25 level could serve as a solid barrier should it be tested. As for the downside, the EUR/USD has growing near-term uptrend lines serving as technical cushions along with intraday and 6/15 lows.
Present Price: 1.2294
Resistances: 1.2294, 1.2311, 1.2326, 1.2353, 1.2382, 1.2415
Supports: 1.2267, 1.2243, 1.2216, 1.2201, 1.2172, 1.2161
Psychological: June lows and highs, 1.23, 1.25, 1.20
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