The EUR/USD staged an encouraging rally on Friday, bouncing off our 2nd tier uptrend line as both gold and the S&P futures headed higher despite weaker than expected EU GDP data along with a disappointing UoM Consumer Sentiment number. However, the bounce has stalled at what is now our 2nd tier downtrend line and the EUR/USD is confronting the highly psychological 1.50 area once again. Hesitation in the EUR/USD comes in reaction to mixed U.S. Retail Sales data along with a weak reading from the Empire Index. The continuation of a negatively mixed data flow from the U.S. is deterring investors from sending the EUR/USD beyond 1.50 and the S&P futures past 1100. As a result, the EUR/USD appears stuck in a trading range between previous November highs and lows. That being said, the EUR/USD has technical forces at work on both sides.
Technically speaking, the EUR/USD still faces our 2nd and 3rd downtrend lines along with the highly psychological 1.50 level and previous November highs. However, the topside barriers are wearing thin, and a breach beyond our 3rd tire downtrend line could result in a retest of November and October highs with the possibility of more accelerated immediate-term gains. As for the downside, the EUR/USD has built up a solid support system considering the rally since November lows. Therefore, the EUR/USD has multiple uptrend lines serving as technical cushions along with 11/12 and 10/27 lows. Meanwhile, investors should keep an eye on the S&P's interaction with its psychological 1100 level because a topside breakout in the S&P could bring the EUR/USD along for the ride due to their positive correlation.
The EU will be relatively quiet on the data side, leaving tomorrow's action up to British and American pricing data. The EU released CPI data in line with expectations today, yet investors have shown a muted reaction to the data release thus far.
Present Price: 1.4962
Resistances: 1.4967, 1.4992, 1.5011, 1.5019, 1.5046, 1.5060
Supports: 1.4952, 1.4937, 1.4924, 1.4904, 1.4883, 1.4856
Psychological: 1.50, November Highs and Lows