The EUR/USD has experienced a sizable down bar on the 4-hour amid a vicious sell-off in the Pound. A poll released yesterday revealed that the UK election is a dead heat, drawing skepticism about whether the government will be able to tackle its fiscal woes with a hung parliament. Uncertainty has now bled over into the UK, drawing the EUR/USD lower since there are still major problems in the EU. Merkel is sticking to her guns by stating that Greece needs to take care of its own problems, reigniting uncertainty regarding whether Germany would in fact help bail out Greece should the situation call. However, the EUR/USD is holding up relatively well considering today’s pandemonium in the Pound. The Euro’s relative strength is reflected by a huge move higher in the EUR/GBP. Additionally, the EU’s headline Unemployment Rate printed at 9.9%, two basis points below analyst expectations. Solid EU employment data coupled with weak U.S. pricing data has allowed the EUR/USD to hold above its psychological 1.35 level and 2/25 lows. Meanwhile, investors are waiting on America’s ISM Manufacturing PMI data. Should the PMI number come in below analyst expectations investors may lift the EUR/USD. However, a strong figure could weigh the EUR/USD lower amid excitement over an improving U.S. economy. We’ve got a slew of central bank meetings this week, beginning with the RBA during tomorrow’s Asia trading session. The EU will follow with its CPI Flash Estimate later in the session. Should the RBA tighten, this could help buoy the risk trade across the board in anticipation of an improving global economic environment.
Technically speaking, the EUR/USD still faces multiple downtrend lines along with 2/26, 2/23, and 2/17 highs. As for the downside, the EUR/USD has several uptrend lines (off chart) serving as technical cushions along with 2/19 lows. Furthermore, the psychological 1.35 area could continue to have an impact on price movements.
Present Price: 1.3534
Resistances: 1.3546, 1.3572, 1.3599, 1.3634, 1.3654, 1.3676
Supports: 1.3516, 1.3493, 1.3460, 1.3440, 1.3420, 1.3394, 1.3377
Psychological: February lows, 1.35
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