Forex Technical Update
Eurozone retail sales did miss expectation of a -0.1%, falling -1.0% in April. Also the bank recapitalization discussion is swaying towards government responsibility now. It was the possibility of direct injection to banks instead of the government that gave bank shares hope during the 6/5 session and gave the euro a boost.
EUR/USD Chart 1H 6/4/2012 7:24 AM EDT
The EUR/USD rallied as high as 1.2540 in the Asian session before stalling and then falling in the European session. The drop went straight through some support factors and is now just above 1.24 as we gear up for the 6/5 US trading session.
EUR/USD Chart 4H 6/4/2012 7:26 AM EDT
A break below 1.24 should open up the the 1.2285-1.23 low again.It's a becoming a choppy one but the bearish momentum remains in the 4H chart. The RSI in this time-frame basically stayed below 60, and if it pushes below 40, it would reflect a bearish continuation.
Price action, looking at the strength of the candlestick also suggests bearish continuation, or at least that bears are still dominant.
For The 6/5 US session, the 1.2285-1.23 area will be the key challenge. A break opens up 1.22, and keeps the 1.19 2011 low and the 1.20 psychological support in sight. Failure to reach/break this area suggests we might have another leg to the correction that started after the NFP release on 6/1.
US ISM services PMI for May comes out 6/5 at 10:00AM EDT
Forecast: 53.6, previous 53.5.
Manufacturing data has been off, and a bad services PMI release would also go to strengthen belief that Bernanke will announce some type of monetary stimulus measure on Thursday. This belief would be a challenge to further USD gains and thus can help protect the 1.2285-1.23 area.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.