Forex Technical Update

Previous: EUR/USD Edges Below 1.29 as Eurozone Bankers Brace for Greek Exit (5/14)


EUR/USD 1H chart 5/15/2012 7:48AM EDT


After a 2-week tumble from about 1.3280 to 1.2810, the EUR/USD started to stall against this trend in the 5/15 European session. The Euro Area avoided a recession in Q1 on the back of positive German GDP data. In my opinion, the data is not that great at all, but risk sentiment have been stretched and this data did not stoke a panic.

The pullback might not have much juice unless EU finance officials coming out of the Brussels meeting give the markets confidence and hope that Greece will stay in the Eurozone and countries like France won't renege on their austerity measures forced upon French citizens as a condition of the bailouts received.

Looking at the 1H chart with fibonacci retracement levels map based on the swing from last week's high to this week's low so far, we see that we are not even 38.2% retracement. There could be some further unwinding especially if risk appetite stays in the US session. There are April CPI and retail sales data from the US at 8:30AM EDT.

If there is further retracement, renewed selling might come in around the 1.29 handle, which was last week's low and brief support. 1.2893 is 50% retracement and 1.2913 is 61.8% retracement. Also note that the RSI is below 60. If the market can hold below these retracement levels and pivots, we should see a slide to 1.28, with 1.2625-1.2670 support area in sight. Above 1.2950, we are possibility in a more significant unwinding that can bring us back to 1.30, 1.31 before stronger selling interest.

In the 4H chart below we see that the 61.8% retracement of its 2-week slide is at 1.31.

EUR/USD 4H chart 5/15/2012 8:01AM EDT


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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.