The EUR/USD is looking to wrestle free of its slight consolidative period following Tuesday's important movement to the topside. As we explained in our previous analysis, the EUR/USD jumping past our previous 3rd tier downtrend line and August highs was a clear technical message in favor of the uptrend following heavy summer consolidation. However, volume has tailed off a bit since then, and investors are waiting for China's economic data Thursday evening EST. Regardless of present consolidation, a fresh uptrend is alive and well, indicating China's econ data will likely surpass analyst expectations. We can't create any new downtrend lines besides connecting through weekly highs, a very positive sign for the EUR/USD. Therefore, we believe the EUR/USD has quite a lot of room left to go to the topside over the near-term. However, December 2008 highs should serve as an intermediate technical barrier to the topside should they be tested. Furthermore, the 1.45-1.50 range could prove to be sticky since the EUR/USD has quite a bit of historical trading in this zone dating back to 11/2008-03/2009 and 08/2009-09/2009. Hence, 1.50 represents a key psychological barrier as far as the EUR/USD's medium-term uptrend is concerned.
As for the downside, we've obviously readjusted our uptrend lines to compensate for Tuesday's breakout and 1.45 becomes a psychological support. France reported a setback in the recovery of the nation's Industrial Production data, applying slight downward pressure on the EUR/USD. However, Germany printed a much better than expected Industrial Production number on Monday, so EU Industrial Production has clearly been counterbalanced. With EU economic data pretty much finished for the week, the one force that could alter the EUR/USD's near-term upward trajectory would be disappointing Industrial Production data from China. However, China's data should come in line since the government feels comfortable enough to tighten the gates a little on liquidity. We maintain our bullish near-term outlook on the EUR/USD even if the currency pair should gravitate to the psychological 1.45 level over the immediate-term.
Present Price: 1.4588
Resistances: 1.4590, 1.4606, 1.4639, 1.4672, 1.4710
Supports: 1.4550, 1.4534, 1.4518, 1.4506, 1.4483