The EUR/USD is trading back above 9/21 lows, recovering from earlier losses while avoiding a retest of 1.45. Meanwhile, the EUR/GBP is trading off of intraday highs after touching .93. Therefore, the EUR/USD is rebounding with a broad-based dip in the Dollar rather than thriving off of the Euro's relative strength. We may continue to see the EUR/USD behave more closely to its correlations throughout the week rather than relying on economic data and the ECB's comparatively hawkish stance. Since the EU will be releasing only scattered, light-weight data throughout the week, investors will price the EUR/USD more on last week's stream of negatively mixed data. The wave of PMI data was disappointing and Germany's Ifo Business Climate number was nothing to cheer about. We are noticing a pullback in overall global economic data, and it appears stimulus measures may begin to wear off. Therefore, we are entering a key phase of the recovery. It is uncertain whether the global economy can continue on its present growth track sans stimulus.

Due to the lack of EU economic data this week, the EUR/USD will rely upon the performance of U.S., British, and Japanese economic data. Therefore, the EUR/USD should ultimately follow the path of U.S. equities and gold. We are beginning to disfavor U.S. equities while the GBP/USD and USD/JPY continue to make clear commitments to longer-term downtrends. The relative strength in the EUR/USD could gradually deteriorate if the currency pair's positive correlations don't cooperate. Hence, we maintain our neutral outlook trend-wise on the EUR/USD until we get a clearer indication of where markets are headed or a change in monetary policy behavior from the ECB. Tomorrow will be a busy day data-wise in other parts of the world. The U.S. will release some important consumer and housing data while Britain will print a wave of its own. Should tomorrow's econ data disappoint, we could see a test of 1.45 rather quickly.

Technically speaking, our 1st tier uptrend line plays an important role over the immediate-term. Since the 1st tier runs through 9/09 lows, a failure of this trend line suggests a reversal to the psychological 1.45 area. As for the topside, we notice multiple downtrend lines bearing on price along with Friday's highs. Meanwhile, we are in the midst of multiple trend line inflection points, indicating a spike in volatility over the next 24-48 hours. Hence, a test of 1.45 could be in the works and the EUR/USD appears to be favoring the downside.

Present Price: 1.4640

Resistances: 1.4656, 1.4677, 1.4703, 1.4724, 1.4745

Supports: 1.4634, 1.4611, 1.4580, 1.4563, 1.4541, 1.4519

Psychological: 1.45

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