The EUR/USD is pulling back from 1.50 and our important 2nd and 3rd tier downtrend lines as we witness a consolidation of the risk trade across the marketplace. Investors are hesitating at significant levels in both the EUR/USD and the S&P futures as they approach their highly psychological 1.50 and 1100 levels, respectively. Furthermore, we are witnessing a retracement in gold towards its own psychological $1100/oz level. Such consolidation is healthy considering the relative lack of economic news along with the significance of these psychological levels in terms of future trends. Although the news wire has been somewhat quiet so far today, the EU did release its ZEW Economic Confidence data. The ZEW numbers printed roughly 10% below consensus estimates, deflating optimism generated from Germany's positive Industrial Production release yesterday. Although the ZEW data is continuing its decline from September highs, the slope is gradual and could be part of a healthy pullback. Therefore, it may be too early to jump to any conclusions based off of this one data release. Regardless, investors didn't get the stream of positive data they were looking for, halting the EUR/USD ascent towards October highs.
Speaking of technicals, our 2nd and 3rd downtrend lines are still intact despite yesterday's impressive rally. These downtrends should be considered heavily-weighted since their run through October highs. Therefore, a solid movement above these two trend lines could yield a nice near-term pop. Meanwhile, the 1.50 level continues to play a lead role as far as resistance is concerned. As for the downside, the EUR/USD still has multiple uptrend lines serving as technical cushions along with 11/09 and 11/06 lows. Therefore, the EUR/USD has a solid support system in place.
Despite today's calm thus far, activity could heat up late Tuesday EST with the release of key China econ data. China will release Industrial Production, CPI, CPI, and Fixed Asset Investments. Investors will likely be paying particularly close attention to China's econ data since the nation's economy has been an engine in the global recovery. An outperformance in China's data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.
Present Price: 1.4956
Resistances: 1.4966, 1.4981, 1.4999, 1.5019, 1.5037, 1.5049
Supports: 1.4947, 1.4923, 1.4905, 1.4887, 1.4873, 1.4856
Psychological: 1.50, October Highs