Forex Technical Update

Prev: Poor German GDP Data Weakens Euro; (8/16)
Overnight Review (8/16)

EUR/USD 8/16/2011
Bullish Continuation:

- After the poor GDP data for German and the Eurozone, the EUR/USD slid below the 1.44 area, and was coasting above 1.4350.
- The US session releases weren't really that significant, but as I always put it, they can provide "temporal" pivot for the market to accelerate or reverse.
- We are done with the US releases, the last one being the better than expected industrial production data. (Actual: 0.9%, Forecast: 0.5%, Prev: 0.4% (revised up from 0.2%).
- The fact that it's a good number doesn't change the big picture of a wobbly recovery in the US, but the EUR/USD at least has a chance now to continue the rally because this does not invite risk aversion.
- The RSI in the 1H chart still reads above 40. The bounce off this level shows that the market can maintain the bullish momentum, especially with a break above the 60 level.
- If the market breaks above 1.44 and holds above this in the US session, it may be returning to the bullish outlook in the short-term.
- First we are still looking at the 1.4450-1.4460 resistance level. Above that we open up 1.4535-1.4555.

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Fan Yang CMT
Chief Technical Strategist