EUR/USD Trades Lower on Light Volume

By Fast Brokers – The EUR/USD is trading lower today on light holiday volume as the Dollar strengthens across the board.  Due to the relative lack of economic data and activity during a holiday-shortened week, it seems the Dollar is reverting to the positive momentum it has displayed throughout most of the month of December.  However, the EU did release its M3 Money Supply number, which turned negative for the first time since the inception of the global recession.  Hence, the ECB may be discouraged from tightening liquidity too soon since QE measures aren’t having their desired impact on the money supply.  Meanwhile, U.S. will release its Chicago PMI number in a few minutes.  A strong Chicago PMI figure could help the Dollar add onto intraday gains as investors gain confidence in the U.S. economy.  However, the EUR/USD may refrain from taking out important technical levels in either direction since the lack of volume and data may discourage investors from making bold decisions.  That being said, momentum does appear to remain to the downside in the EUR/USD as the currency pair approaches previous December lows.

Technically speaking, the EUR/USD faces multiple downtrend lines along with the psychological 1.45 level, 12/29, 12/23, and 12/18 highs.  Hence, some challenging near-term topside technicals are in place due to the EUR/USD’s recent deterioration.  As for the downside, the EUR/USD has technical cushions in the form of our 1st (off chart) and 2nd tier uptrend lines along with intraday and 12/22 lows.  However, the EUR/USD still trades well below our 3rd tier uptrend line that runs through July lows, meaning the currency pair could be in for more losses over the medium-term towards the psychological 1.40 area.

Present Price: 1.4314

Resistances: 1.4331, 1.4348, 1.4400, 1.4430, 1.4467, 1.4509

Supports: 1.4304, 1.4285, 1.4266, 1.4246, 1.4218, 1.4187

Psychological: 1.45, 1.40, December and September Lows

Market Commentary provided by Fast Brokers.

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