The EUR/USD has dropped back towards January lows and our 2nd tier uptrend line as the Dollar consolidates across the board. Investors are waiting for new U.S. New Home Sales and the Fed's monetary policy decision. Extra weight has been placed on the Fed's monetary policy statement despite the expectation that the central bank will keep its policy unchanged. More government officials have been vocalizing their displeasure with Bernanke lately, so it will be interesting to see how the Fed reacts. Meanwhile, the EU will release German CPI and Unemployment Change data over the next 24 hours and this could move the Euro a bit. However, yesterday's stronger than expected EU data set hasn't had much of an influence over the Euro and the EUR/GBP has reversed from earlier gains. Therefore, it's difficult to assume these upcoming data points from Germany will have much of an impact on the market unless the numbers swing dramatically in one direction or the other. Hence, focus should remain on the U.S. over the next 24-48 hours unless we get more news about China's monetary tightening. Speaking of China, the SCI was under selling pressure today as investors brace for the impact of a more hawkish monetary policy from the central bank. If Chinese equities continue to turn this could drag on U.S. equities as well.

Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with 1/25 highs. As for the downside, the EUR/USD has our 1st and 2nd tier uptrend lines serving as technical cushions along with previous January lows and the psychological 1.40 level should it be tested. Our 1st tier uptrend line could carry some weight since it runs through some April 2009 lows. That being said, a failure of our 1st tier could send a fairly negative signal considering April 2009 lows are around the 1.30.

Present Price: 1.4057

Resistances: 1.4078, 1.4096, 1.4118, 1.4152, 1.4174, 1.4193

Supports: 1.4045, 1.4015, 1.3981, 1.3950, 1.3929, 1.3900

Psychological: 1.40, January lows