The EUR/USD has broken through our 3rd tier downtrend line and consequently September highs. Though the currency pair is trading off of intraday highs, today's move will likely prove to be an important step for the beginning of a new leg up. Our 3rd tier is the final foreseeable downtrend line for the near future. Therefore, barring a large immediate reversal, the EUR/USD may have finally broken loose of its top-end constraints. Today's positive movement comes despite weaker than expected ZEW Consumer Sentiment data. The ZEW numbers are a noticeable setback concerning the future of the economic recovery. Today's data reflects the spotted cool down appearing in econ releases around the globe. The EUR/USD's strength in light of today's news contradicts rationality and reinforces the inherently negative investor sentiment surrounding the U.S. Dollar.
Despite today's topside progress the EUR/USD still has a bit of a rough patch to deal with between present price and the highly psychological 1.50 level before immediate-term gains can truly accelerate. Meanwhile, the EUR/USD's near-term fate likely rests upon the shoulders of 3rd quarter earnings results and important U.S. econ data over the next two days, including Retail Sales and Core CPI. If U.S. earnings and econ data both top expectations then the EUR/USD may receive the boost it needs to top 1.50. On the other hand, any significant setbacks could undermine today's progress and cap near-term gains.
As we mentioned previously, the EUR/USD's pop past our 3rd tier downtrend line and September highs sends a bullish signal. Although 1.50 wouldn't be a cakewalk, recent breakouts in gold and the Aussie leave the Euro with quite a bit of room to make up. As for the downside, the EUR/USD has plenty of cushions, beginning with our fresh 1st tier uptrend line and ending with our 4th tier uptrend line and weekly lows (10/13, 10/12, 10/7, 10/5). As for the topside, the EUR/USD faces technical barriers in the form of 8/21/08 and 8/13/08 highs along with the psychological 1.50 level. The EU will release Industrial Production tomorrow, yet the EUR/USD's upcoming movements will likely depend on the performance of the U.S.
Present Price: 1.4858
Resistances: 1.4881, 1.4905, 1.4946, 1.4981, 1.5013, 1.5052
Supports: 1.4842, 1.4823, 1.4794, 1.4769, 1.4743, 1.4719
Psychological: September Highs, 1.50