More Near-Term Gains For The EUR/USD Currency Pair?

The EUR/USD is edging up on light volume as investors continue to bite on oversold conditions.  The Trade Balance and Factory Orders data from Germany cheered up the bulls yesterday (Wednesday).  However, we haven’t seen any game-changing movements to the upside with our 1^st tier downtrend line bearing down on price.  The near-term obstacle will be hopping over 3/31 highs, or our 1.3351 resistance.  European paired currencies could be relatively quiet over the remainder of the week as traders shut off their computers early to celebrate Easter with their families.  However, don’t forget the BOE announces its monetary policy decision today while the U.S. releases its Trade Balance and weekly Unemployment Claims.

The battle of the trends proceeds with the downtrend holding the upper-hand for now.  There are multiple tiers bearing down on price and vicious war zones lie ahead, including the psychological 1.35 level, 4/6 highs, and the 3/20-3/26 trading range.  On the other hand, the fact that 4/8 lows were above 3/30 lows keeps the uptrend alive.  Additionally, our 1^st tier uptrend line held relatively well.  Therefore, we wouldn’t be surprised to see more near-term gains from the EUR/USD.

The question will be whether the momentum from the current upswing can sling the EUR/USD past April highs, or if the rally falls short.  It seems investors are waiting for U.S. equities to make up their minds directionally, which may not happen until we see earnings from financials and the results from the ’stress tests’.  We expect the positive correlation between the S&P futures and the EUR/USD to hold true, so keep an eye on both.

Fundamentally, our 1.3271 resistance turns support while we maintain our supports of 1.3223, 1.3192, 1.3162, and 1.3126.  To the topside, we hold our resistances of 1.3323, 1.3351, 1.3375 and 1.3413 with fresh top-end hanging at 1.3455.  The 1.35 area acts a psychological barrier again with 1.30 serving as a key psychological cushion.  The EUR/USD is currently exchanging at 1.3281.

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