By Fast Brokers – The EUR/USD is setting new 2010 highs while creating some space between present price and the psychological 1.45 level as we witness weakness in the Dollar across the board. This week’s improvement in Chinese Trade Balance data is likely the driving force behind a return to the risk trade, that and oversold conditions following the Dollar’s December rally. Furthermore, the U.S. Trade Balance data revealed an encouraging improvement in imports, sparking speculation that global consumption is on the rebound. Therefore, it wouldn’t be surprising to see solid U.S. Retail Sales data tomorrow. The question becomes whether the Dollar would rally or decline on such a development since the Greenback was strengthening with positive U.S. data last month. Meanwhile, investors are gearing up for the ECB’s monetary policy meeting tomorrow. Comments from ECB members since the previous policy meeting haven’t changed much. Therefore, it would be surprising to see the ECB keep its policy unchanged while exerting a bit more of a hawkish attitude during the press conference. Regardless, tomorrow’s events could have an impact on the FX markets as the wires begin to heat up for the first time this year.
Technically speaking, the EUR/USD’s movement beyond previous January highs is a positive development considering the currency pair has been consolidating around 1.45 for the last few trading sessions. Additionally, we recognize a breakout in the Cable along with upward movements in the Aussie and gold. Therefore, the EUR/USD’s correlations are all working in favor for the currency pair. However, the EUR/USD still does face our 3rd and 4th tier downtrend lines along with 12/16 and 12/14 highs. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with 1/12 lows and the psychological 1.45 area.
Present Price: 1.4570
Resistances: 1.4573, 1.4596, 1.4634, 1.4666, 1.4687, 1.4720
Supports: 1.4538, 1.4520, 1.4499, 1.4474, 1.4454, 1.4408
Psychological: 1.45, December highs and January lows
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