The EUR/USD is consolidating following yesterday's solid gains in reaction to encouraging Chinese Manufacturing PMI data in conjunction with a 25 basis point increase from the RBA. Meanwhile, gold has broken past its psychological $1200/oz level and the S&P futures are holding strong above their own highly psychological 1100 level. Therefore, the EUR/USD's positive correlations are creating an environment conductive for another leg up in the currency pair. However, investors are presently waiting upon America's ADP Non-Farm Unemployment Change number due this morning. A tough employment market has been a thorn in America's side during its economic recovery. In a noteworthy development, last week's Unemployment Claims finally dipped below their psychological 500k level. Hence, a smaller than expected decline in today's ADP figure could result in a pop in the risk trade. On the other hand, sluggish ADP data could drag the EUR/USD back towards its psychological 1.50 level.
In addition to today's ADP Non-Farm Unemployment Change data, Euro investors are eagerly awaiting tomorrow's ECB meeting. Trichet had a more hawkish tone at the central bank's last press conference. Therefore, it will be interesting to see whether the ECB maintains this tone or even delivers a shock be extracting some of its alternative liquidity measures. Either way, there is a bit of uncertainty heading into tomorrow's meeting, meaning we could witness sizable volatility over the next 24-48 hours, especially considering the U.S. will announce its headline Unemployment Rate on Friday.
Technically speaking, the EUR/USD has created some space between present price and the psychological 1.50 level. The currency pair has cleared October highs once again and could take a shot at November highs. That being said, investors should monitor the EUR/USD's interaction with our 3rd tier downtrend line and 11/25 highs should they be tested. A breakout beyond these two technical barriers could yield a more accelerated upward movement. As for the downside, the EUR/USD has multiple uptrend lines serving as technical cushions along with intraday lows and the psychological 1.50 level.
Present Price: 1.5087
Resistances: 1.5107, 1.5117, 1.5133, 1.5154, 1.5168, 1.5117, 1.5133
Supports: 1.5071, 1.5064, 1.5045, 1.5027, 1.5015, 1.4988, 1.4977
Psychological: 1.50, November Highs