The EUR/USD is pulling back today after bouncing off of our previous 1st tier uptrend line. The EUR/USD failed to break through our previous 2nd and 3rd tier downtrend lines on Thursday, and instead opted register a brisk decline despite a lack of econ data economic data besides EU Industrial Production (0.3% vs. 0.6% expected). However, today's wave of econ data shows that yesterday's pullback was warranted. German and French Prelim GDP numbers both came in below analyst expectations while the EU Flash GDP figure printed weak as well (0.4% vs. 0.6% expected). Today's wave of disappointing data tacks onto Tuesday's negative ZEW Economic Sentiment numbers. Hence, this week's data flow indicates that the EU's economic recovery is occurring at a more gradual rate than anticipated. This realization is putting relative downward pressure on the Euro, as exhibited by the downturn taking place in the EUR/GBP following a consolidation period. Hence, the ECB may be hard pressed to tighten its alternative liquidity measures come December, although we will have to see how upcoming data points pan out.
Meanwhile, yesterday's better than expected U.S. Unemployment Claims data failed to excite investors, indicating the bulls may be running out of steam. We're currently waiting on Prelim UoM Consumer Sentiment. However, we have already received data showing the U.S. Trade Balance widened more than anticipated and import prices came in 4 basis points below analyst expectations. Therefore, a weak consumer sentiment number could drive the S&P futures into negative territory today and possibly extend intraday lows in the EUR/USD since the two investment vehicles are positively correlated. Despite present weakness in the EUR/USD, the currency pair does have a few more technical cushions to fall back on should today's pullback accelerate.
We've initiated three new uptrend lines to go along with our previous 1st tier uptrend line (now our 4th). Our new uptrend lines are tightly spaced, indicated there could be some heavy support around this zone should it be tested. In addition to our new uptrend lines, the EUR/USD also has 11/06 and 11/02 lows serving as technical cushions along with November lows should they be reached. As for the topside, we've readjusted our downtrend lines to compensate for present weakness. Therefore, the EUR/USD still faces multiple downtrend lines along with 11/05 and 10/15 highs. Meanwhile, the currency pair is drifting further away from its highly psychological 1.50 level, making accelerated topside movements more difficult to attain.
Monday's trading session will kick off with a bang as we receive Japan's Prelim GDP, EU's CPI, and Retail Sales data from the U.S. As a result, recent volatility could carry over into next week's trading session. More weaker than expected econ data results, particularly U.S. Retail Sales, could place further downward pressure on the EUR/USD and test the patience of the currency pair's uptrend lines in the process.
Present Price: 1.4848
Resistances: 1.4883, 1.4907, 1.4934, 1.4950, 1.4966, 1.4987
Supports: 1.4839, 1.4822, 1.4811, 1.4793, 1.4779, 1.4764, 1.4729
Psychological: 1.50, November Highs and Lows