By Fast Brokers – The EUR/USD is consolidating above 1.23 after the currency pair managed to bounce yesterday before hitting previous May lows as the risk trade rallied across the board. The OECD issued encouraging comments concerning the EU, downplaying the possibility of a double dip despite heightened investor uncertainty. However, the Euro is still under considerable pressure, meaning it will be important to see the EUR/USD to continue its consolidation and avoid tripping below 5/19 levels. German consumer climate data came in a bit below analyst estimates, as is to be expected considering present worries in the EU. Attention now turns to U.S. DGO and new home sales data releases. Should the U.S. data print better than expected this could help buoy the EUR/USD with investors gaining a bit more confidence in the risk trade. The EU will be relatively quiet on the data wire tomorrow with German prelim CPI being the sole release. Attention should remain focused on the U.S. with prelim GDP and weekly unemployment claims on the way. However, investors should also keep their eyes on the EU news wire for it is wise to expect the unexpected considering we just received negative news regarding Spain on Monday. Should EU fiscal worries intensify again this could negate any positive data we receive from the U.S. Meanwhile, no news from the EU can be considered good news.
Technically speaking, the EUR/USD faces multiple downtrend lines along with intraday and 5/21 highs. Additionally, the psychological 1.24 and 1.25 areas are now serving as technical barriers. As for the downside, the EUR/USD has supports in the form of intraday and 5/19 lows. Furthermore, the psychological 1.20 could serve as a solid cushion should it be tested.
Present Price: 1.2321
Resistances: 1.2341, 1.2369, 1.2383, 1.2431, 1.2456, 1.2474
Supports: 1.2318, 1.2304, 1.2280, 1.2268, 1.2239, 1.2208
Psychological: May 2010 lows, March 2006 lows, 1.24, 1.25, 1.20
(click chart to enlarge)
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