The EUR/USD is under some selling pressure today after yesterday's rally fueled by U.S. Prelim GDP data failed to overcome 10/27 highs, let alone our 1st tier downtrend line. Additionally, yesterday's buy-side volume came in well below Tuesday's pop in sell-side activity. As a result, a negative investor sentiment remains in regards to the performance of riskier investment vehicles. The AUD/USD, Cable, and gold are also heading south while the USD/JPY trades higher, indicating a broad-based preference for the Dollar. Although yesterday's better than expected U.S. Prelim GDP data fueled a risk rally, the bulls were unable to gather enough momentum to overcome topside technical barriers across markets.
Altogether, the last two weeks of econ data has come in negatively mixed, overshadowing the flashes of recovery we've seen from Q3 earnings and encouraging EU PMI data. The EU reported German Retail Sales today, which printed 12 basis points lower than analyst expectations. Hence, yesterday's drop in the German Unemployment Change didn't translate into higher rates of consumption. Furthermore, U.S. Personal Spending printed a basis point beneath expectations along with declining prices. Investors should also keep in mind that yesterday's Unemployment Claims number came in 8k higher than anticipated, yet was overlooked due to the optimism surrounding the GDP data. In other words, indicators highlighting future economic performance in Western economies are implying a sluggish Q4. As a result, the fundamental tools aren't in place for investors to have enough confidence to lock the EUR/USD back into its uptrend just yet.
Technically speaking, this week's sharp movement below the psychological 1.50 level is a discouraging sign for bulls. However, there remain several uptrend lines we can form, meaning the EUR/USD has a few technical cushions to rely upon before investors can safely cry bear. The EUR/USD has four uptrend lines to fall back on along with the psychological 1.45 level should the currency pair take a turn for the worst. Our 2nd tier uptrend line seems to be a key technical since it runs through October lows and likely represents the support separating the EUR/USD from a retracement towards 1.45. As for the topside, the EUR/USD now has multiple uptrend lines bearing down on price and the psychological 1.50 level becomes a technical barrier once again. Overall, although the uptrend remains intact, investors should tread carefully since U.S. equities are facing headwinds.
Present Price: 1.4761
Resistances: 1.4783, 1.4819, 1.4844, 1.4863, 1.4890, 1.4925
Supports: 1.4727, 1.4700, 1.4671, 1.4638, 1.4608, 1.4578
Psychological: 1.50, 1.45