By Fast Brokers – The EUR/USD is moderating around 1.45 as the wires begin to heat up for the first time this with an ECB policy meeting and U.S. Retail Sales headlining on Thursday. The ECB is expected to keep its monetary policy intact despite a bit of discouraging data as of late. The ECB may tighten its language a bit with the lingering possibility of an announcement concerning the removal of an alternative liquidity measure due to the confident language emitting from central bank representatives. Meanwhile, U.S. Retail Sales could print well on Thursday since today’s U.S. Trade Balance showed imports outpaced exports. For the time being, investors are digesting news that China is increasing its level of required reserves for banks. Today’s announcement coincides with an 8 basis point increase in the yield for 1-month bonds. Hence, governmental authorities are sending a clear message to financial institutions that they better ease up on loan issuance. That being said, China will release New Loans data in the coming days. Extra emphasis could be placed on this data point since the term ‘overheating’ has become synonymous with China. Along with news from China, earnings from Alcoa kicked off the earnings season on a sour note. However, earnings won’t shift into first gear until next week. As for the EU, the wires should be quiet until the ECB meeting on Thursday. As a result, the EUR/USD’s movements between now and then could be tied closely to the currency pair’s Dollar correlation.
Technically speaking, we’ve readjusted our downtrend lines to compensate for yesterday’s nice topside breakout. That being said, the EUR/USD does have quite a bit of room to make up for considering the extent of December’s decline. Therefore, the EUR/USD does have some more obstacles to overcome, including 12/16, 12/14, and 12/11 highs. Meanwhile, the EUR/USD has broken through previous January highs after building a solid based above December ’09 lows. The EUR/USD has bought some more breathing room to the downside in the process, including multiple uptrend lines along with 1/8 and 12/22 lows.
Present Price: 1.4479
Resistances: 1.4499, 1.4520, 1.4555, 1.4573, 1.4599, 1.4634
Supports: 1.4477, 1.4460, 1.4425, 1.4388, 1.4363, 1.4334
Psychological: 1.45, December highs and January lows
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