By Fast Brokers – The EUR/USD is consolidating below its highly psychological 1.30 level despite today’s negative news from Ireland and Hungary. Moody’s lowered Ireland’s debt rating by one notch over worries of financial deterioration within the country’s banking sector. However, investors have brushed aside the downgrade as overdue and Moody’s also stated that Ireland is making good progress as far as austerity is concerned. Meanwhile, Hungary ended talks with the IMF and EU regarding the remainder of bailout funds after Hungary refused to continue with austerity measures. Hungarian bond yields soared in reaction to the news and the Forint tumbled by nearly -3.5% vs. the Euro. Investors should keep a close eye on the situation in Hungary since EU banks undoubtedly have substantial exposure to Eastern European economies. On an encouraging note, it is likely that the Hungarian government is just trying to win political points and leaders will likely come to an agreement with the IMF and EU. Regardless, investors should monitor the situation over the coming days. Despite the negative news hitting the wires today the EUR/USD has held up well and the EUR/GBP is popping. The relative strength in the Euro likely stems from anticipation of the release of bank stress test results on Friday. Investors expect the report will boost confidence in the EU’s financial situation. However, considering how much the Euro has been boosted ahead of the stress test results it wouldn’t be surprising to see the currency pair sell on the news if investor uncertainty stays at a heightened level throughout the week, particularly if the stress test isn’t as thorough as desired. The EU will be quiet on the data wire tomorrow, meaning investors will be focusing on the release of the RBA’s meeting minutes along with U.S. building permits data.
Technically speaking, the EUR/USD faces technical barriers in the form of intraday highs and the highly psychological 1.30 level. As for the downside, the EUR/USD has supports in the form of intraday and 7/15 lows.
Present Price: 1.2928
Resistances: 1.2973, 1.2990, 1.3020, 1.3040, 1.3067, 1.3091
Supports: 1.2940, 1.2914, 1.2886, 1.2856, 1.2836, 1.2799
Psychological: 1.30
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