Currencies Could Come Back To Life Today

Though yesterday’s rally in the EUR/USD made some interesting strides by edging above 4/9 highs and our 1^st tier downtrend line, investors are taking profits Tuesday.  The volume was still light yesterday due to the Easter holiday and a lack of economic data.  However, we could see currencies come back to life today with the U.S. releasing retail sales and PPI.

Even though the EUR/GBP could experience more near-term losses, it appears the currency pair should find some support soon.  Therefore, the EUR/USD may experience considerable strength around our 1^st tier uptrend line and 1.3192 support, if the currency pair should reach this level.  We expect the EUR/USD to remain in this volatile consolidation phase for the near-term as investors try to figure out exactly where the global economy stands.

The Euro is still at a disadvantage with the ECB taking a vague monetary stance, and uncertainty hardly ever yields a positive performance in price. Will the ECB cut its benchmark further or initiate unorthodox liquidity processes?  Nobody knows at this point.  Since the economic data surfacing from the EU over the past month has been mixed, the ECB will likely wait to see if the signs of improvement are only a bounce or a real turn in events.  We’ll witness a couple inflection points shortly, including our 1^st tier uptrend and downtrend lines and our 2^nd tier uptrend and downtrend lines.

Therefore, the EUR/USD is signaling that it could reach a directional pivot point soon.  Fundamentally, we maintain our supports of 1.3271, 1.3223, 1.3192, 1.3162, and 1.3126.  To the topside, we hold our resistances of 1.3323, 1.3351, 1.3375, 1.3413, and1.3462.  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 1.3277.

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