The EUR/USD is settling above Thursday lows and our 3rd tier uptrend line after pulling back from Thursday highs. Much better than expected French Industrial Production data is helping buoy the Euro after investors decided to lock in profits earlier. The outperformance of French versus German econ data stems from the negatively mixed PMI numbers we received a couple weeks back. The underperformance of Germany's economy is likely a key factor driving the ECB to keep liquidity flowing right now. However, the economic versatility of the EU region is keeping the EUR/USD near our 3rd tier downtrend line and September highs. The currency pair has logged four consecutive higher lows, a positive development technically. In fact, the EUR/USD peaked just past our 3rd tier downtrend line yesterday before buckling. This shows the EUR/USD is very close to a technical breakout since our 3rd tier runs through September highs. After September highs all the EUR/USD has to deal with is the psychological 1.50 level before experiencing accelerated near-term movements to the topside. As for the EUR/USD's downside technicals the currency pair has multiple uptrend lines along with 10/7 and 10/5 lows serving as cushions.
Meanwhile, gold and the AUD/USD are developing new bases and could add onto earlier gains over the next week. However, it remains to be seen whether these strong pulls on the Dollar will experience a little more profit taking before setting a true bottom. That being said, investors should keep in mind that the breakout in gold and the AUD/USD doesn't necessarily guarantee a similar topside breakout in the EUR/USD. The Aussie and EU economies are structured differently and the central banks will approach their exit strategies as they see fit. Though the EUR/USD's topside technical barriers are wearing thin they exist nonetheless. Hence, a downward pressure is still hampering larger immediate-term gains. The Euro's near-term performance ultimately depends on upcoming Q3 earnings results and next week's econ data from both the EU and U.S. Investors need to see fundamental economic improvements in the EU and encouraging U.S. earnings before committing to a movement towards 1.50 and higher. Additionally, unexpected central bank comments could always jolt the FX markets psychologically. The first big econ release from the EU next week will be Tuesday's German ZEW Economic Sentiment data. Trading should be light on Monday since the U.S. will be off on a banking holiday.
Present Price: 1.4745
Resistances: 1.4769, 1.4799, 1.4823, 1.4881, 1.4905, 1.4946
Supports: 1.4721, 1.4704, 1.4683, 1.4648, 1.4625, 1.4589, 1.4567
Psychological: September Highs, 1.50