EUR/USD Outlook: Uptrend Is Intact For The Time Being

The EUR/USD popped up yesterday (Wednesday) after Timothy Geithner admitted that there may be a better international currency reserve than the U.S. Dollar.  However, Geithner later clarified that he believes the U.S. Dollar will continue to play a key role in international reserves and transactions.  The stability of the U.S. Dollar has been thrown into doubt in the face of historical governmental spending and the Federal Reserve’s planned use of quantitative easing.

Analysts are anticipating massive inflation in the U.S., or an extreme depreciation of the Dollar against major currency pairs.  Therefore, governments are voicing their opinion concerning the domination of the U.S. Dollar before the G20 summit.

The Euro is poised to benefit from such talks since the ECB has kept its benchmark rate at a reasonable level while avoiding quantitative easing thus far.  Therefore, it’s fair to assume the uptrend is intact for the EUR/USD for the time being.

The currency pair reflects this belief fundamentally, finding stability along our 2^nd tier uptrend line while peering at March highs.  If the EUR/USD can propel itself over these highs, then we foresee large near-term gains towards the psychological 1.340 mark.  Then again, if the currency pair can’t hold yesterday’s lows, or our previous 1.3427 support, then we could see a large near-term contraction.

Fundamentally, we find supports of 1.3554, 1.3494, 1.3427, and 1.3371.  To the topside, we see resistances of 1.3624, 1.3688, 1.3724, 1.3762, and 1.3811.  The EUR/USD is currently exchanging at 1.3580.

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