EUR/USD Lower Today Despite Better IFO Data

The EURUSD is lower this morning despite the better IFO data out of Germany this morning.  The IFO Business Climate index came in at 85.9 vs expectations of 85.0 and up from 84.2.  However, the pair was still pressured.  There was a report that Germany’s budget shortfall might be larger than expectations (up to 100 Billion EUROS).  The World Bank also announced that global growth will shrink by -2.9% for 2009 vs their estimate of -1.7% in March.  They also suggested that money would continue to flow out of the emerging countries.  This would normally benefit the US dollar.  Finally, this week the ECB has its annual funding operations.

The EURUSD sold off away from the 200 hour moving average but found prodit taking buyers against the 100 hour moving average.  Later the level gave way until buyers emerged against low levels from Wednesdays trade at the 1.3922 level. The low reached wa 1.3827.  Looking at the 5 minute chart, the 100 bar moving average provided the guiding track to the downside for the pair the  entire night - testing the level on a few occassions but not being able to break above.  The pair consolidated around the 1.3902 area where the 100 hour moving average was located before taking another drop to the lows.  The 5 minute chart is showing a slowing of the decline as the moving averages catch up. The 100 bar (blue line in the chart below) comes in at 1.3869 currently.

The pair has the support against the lows on Wednesday at the 1.3822 and 1.3806 levels. The low last week comes in at the 1.3748. The Head and Shoulder formation is still alive although it needs the momentum to the downside.  The 100 and 200 day Moving averages are converging below at the 1.3343 area.  Resistance above

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