Sep
2
2010

 

EUR/USD Settles Ahead of ECB Meeting

The EUR/USD is settling around 1.28 following yesterday’s encouraging rally in the risk trade as investors await the ECB’s monetary policy decision.  Analysts are expecting the ECB to stay dovish considering the headwinds blowing back from the U.S.  Additionally, the ECB will likely need to keep monetary policy loose for the foreseeable future in order to counter the contractionary impacts from austerity measures.  While expectations of such a dovish stance would normally weigh on a currency, the Euro is outperforming as investor uncertainty cools.  Solid manufacturing PMIs from both the U.S. and China along with a positive wave of data from Australia have allowed the risk trade to stabilize and rally across the board.  Meanwhile, the EUR/USD’s August lows appear to be firming as the currency pair targets medium –term uptrend lines which are presently hanging around the highly psychological 1.30 level.  That being said, 1.30 would serve as the key test over the near-term if the current rally carries forward.  Between today’s ECB and tomorrow’s headline U.S. employment data the EUR/USD will have plenty of data and news to serve as catalysts.  Additionally, the U.S. will print pending home sales data today and investors are expecting a decline of -1.3%.  If pending home sales manage to top expectations the EUR/USD may gain new topside momentum.  However, investors should keep in mind that considerable downward pressure remains to the downside and we’re in the midst of a risk-on/risk-off market.  
Technically speaking, the EUR/USD faces technical barriers in the form of intraday and 8/18 highs along with the highly psychological 1.30 level.  As for the downside, the EUR/USD has supports in the form of intraday and 9/1 lows.  Additionally, the psychological 1.25 level could serve as a solid cushion should it be tested.  
Present Price: 1.2819
Resistances: 1.2833, 1.2852, 1.2868, 1.2882, 1.2899, 1.2914
Supports:  1.2802, 1.2786, 1.2765, 1.2747, 1.2726, 1.2695
Psychological: 1.25, 1.30
 
 
 

 
Posted by: Matthew Myers

 

Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.

 

 
support