By Fast Brokers – The EUR/USD is tumbling lower again with a large down-bar on the 4-hour. The Euro came under selling pressure after Germany’s Prelim GDP printed flat, or 2 basis points below analyst expectations. Additionally, French Prelim Service Payrolls, Italian Prelim GDP, EU Flash GDP and EU Industrial Production all disappointed. The only silver lining in today’s data set was 0.6% GDP growth in France. However, growth in France didn’t prove strong enough to counter overall weakness in the EU, highlighted by a 0.1% EU Flash GDP number. Also troubling is the huge pullback in Industrial Production (-1.7%). Such data reverts back to numbers we saw during the summer of 2009. Meanwhile, China surprised markets by announcing another 50 basis point rate hike in the required reserve ratio. China may be sending a message by tightening liquidity the day before the Chinese New Year, particularly that the government plans on being more fiscally responsible during the year of the tiger. Also, Chinese equity markets will be closed for a week, delaying a reaction from the SCI as the news sinks in. Investors are currently awaiting upcoming retail sales and consumer confidence data from the U.S. Considering the volatility we’ve witnessed in the FX markets thus far today, it wouldn’t be surprising if this data set yields considerable activity in the Dollar and U.S. equities. Strong U.S. economic data could send investors towards the Dollar amid economic uncertainty around the globe. Additionally, weak data releases could also benefit the Dollar as investors run for risk. Therefore, it will be interesting to see how the trading session plays out.
Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with intraday, 2/8 and 2/11 highs. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with 2/5 lows and the psychological 1.35 level should it be tested.
Present Price: 1.3578
Resistances: 1.3592, 1.3617, 1.3645, 1.3664, 1.3693, 1.3721
Supports: 1.3563, 1.3534, 1.3517, 1.3483, 1.3453, 1.3421
Psychological: February highs and lows, 1.35
(click chart to enlarge)
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