The EUR/USD is experiencing profit-taking as investors lock-in some gains. The lack of global economic data provides a great opportunity for profit-taking. We notice profit-taking across the board, from equities to crude to the Yen. Investors won't receive noteworthy econ data until Wednesday's rush of EU PMI data grouped with BoE and Fed monetary policy decisions. The Greenback's broad-based strength is not surprising, and a return to the Dollar is being encouraged by political and economic uncertainty in the U.S. Obama's popularity is waning as the U.S. President deals with financial and health care reform along with deteriorating conditions in Afghanistan. President Obama's honeymoon is certainly over, and U.S. citizens want results. Meanwhile, trade disputes with China are brewing in the background, stoking fears of global protectionism. However the central bank meetings and G20 summit provide perfect opportunities to improve psychology. Meanwhile, investors shouldn't forget that last week's round of data was impressive, particularly numbers from the U.S. and EU. Therefore, global economic fundamentals continue to strengthen, meaning the longer-term depreciation of the Dollar is still in play. Investors would need surprisingly negative outcomes from the central bank and G20 meetings this week coupled with weak economic data to reverse the positive tide.
Meanwhile, the Euro continues to flex its relative strength due to the combination of positive EU econ data and the ECB's comparatively hawkish monetary stance. However, the EUR/GBP has been on a tear lately, so further consolidation in this currency cross and slight weakness in the Euro wouldn't be surprising. We found last week's EU pricing and export data improved beyond expectations, supporting the ECB's monetary policy. Wednesday's PMI data should play an important role in extending the ECB's philosophy should the data outperform. We've readjusted our uptrend lines to compensate for today's dip. The EUR/USD remains comfortably above 9/15 lows and our new 1st tier uptrend line. We find a recurrent theme across the markets regarding the importance of 9/15 lows. Therefore, investors should keep an eye on 9/15 lows in gold, crude, and the S&P futures. The protection of the EUR/USD's 9/15 lows and our 1st tier uptrend line could spell the difference between a minor setback and a more protracted decline. The 9/15 lows carry further importance for the EUR/USD since they also represent a retest of the 1.45 psychological level.
Present Price: 1.4644
Resistances: 1.4656, 1.4678, 1.4703, 1.4724, 1.4745
Supports: 1.4627, 1.4609, 1.4590, 1.4568, 1.4551
Psychological: 1.45, 1.50