The EUR/USD is continuing its consolidation around the highly psychological 1.50 mark after Germany's Consumer Climate number came in weak as anticipated. Despite the miss, the EUR/USD is showing little reaction since today's data reading could be just a bump in the road to improvement and doesn't confirm a material slowdown. Psychologically, the Euro is getting a bit of support today after a Chinese official released a statement implying that it would be in the country's best interest to diversify more of its reserves away from Dollars towards the Euro and Yen. While the official did reiterate the Dollar's prevalence as the global monetary standard, his comments nonetheless support China's waning confidence in the Greenback. However, the Yen is actually weakening this morning, and it remains to be seen whether this news will have a noticeable impact on the Dollar.
Today's session will be light on the data front, meaning prevailing near-term trends may play through. Although the EU will be releasing its M3 Money Supply number tomorrow, investors will likely be paying closer attention to British and U.S. data points. Britain sent a shock through the FX markets last week after printing a Prelim GDP figure 6 basis points weaker than expected (-0.4% vs 0.2%E). Britain's GDP number rattled investor confidence. Therefore, investors will likely be paying close attention to tomorrow's CBI Realized Sales data. However, it's difficult to expect positive Realized Sales numbers tomorrow considering the last two Retail Sales releases have come in flat at 0% growth. On the other hand, outperformance of tomorrow's release could provide a bit of relief to investor anxiety and help buoy the Pound. As for the U.S., investors will receive CB Consumer Confidence along with some S&P HPI data. More strong U.S. data could drive the Dollar lower and help the EUR/USD create a little separation from 1.50.
Meanwhile, the Euro has regained its footing against the Pound, signified by Friday's solid pop in the EUR/GBP. Britain's surprisingly weak Prelim GDP figured has reignited speculation that the BoE will keep the liquidity window open. However, it will be interesting to see if the ECB reiterates its desire for a stronger Dollar this week. For the time being the EUR/USD continues to float around its highly psychological 1.50 level. We've highlighted the significance of 1.50 in our past commentaries, and it seems growing investor uncertainty in other risk currencies is preventing the EUR/USD from creating topside separation. However, the technicals and fundamentals are still working in favor of the Euro, and considering the lack of topside technicals all the EUR/USD may need is a little boost before taking off towards 1.55. On the other hand, any underperformance in U.S. Q3 earnings or econ data next week could undermine the EUR/USD's uptrend.
Technically speaking, the EUR/USD is right around where we left it last week. Our makeshift 3rd tier downtrend line and 1.50 continue to serve as the only foreseeable topside barriers separating the currency pair from accelerated upward movements. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 10/22, 10/20, and 10/19 lows. Therefore, while the EUR/USD has seemingly hit at wall at 1.50, near-term technical supports appear to outweigh resistances, normally a positive sign.
Present Price: 1.5030
Resistances: 1.5052, 1.5086, 1.5127, 1.5146, 1.5183
Supports: 1.5013, 1.4981, 1.4942, 1.4921, 1.4880, 1.4860