EUR/USD Edges Higher as EU Contemplates EMF

The EUR/USD is edging higher and continues to hold strong above its psychological 1.35 level and previous March lows as EU members contemplate the creation of a European Monetary Fund to forge economic cohesion and stability in the union. Hence, it seems the EU is beginning to show more leadership and is taking a unified stance to battle fiscal imbalances with Sarkozy adamantly defending Greece the other day. The data wire was relatively quiet today, although French Industrial Production did come in stronger than anticipated. Germany’s Trade Balance figure was a bit alarming because it was the smallest surplus since March 2009. Therefore, it appears demand for German made goods curtailed last month. China’s Trade Balance number printed in line with analyst expectations and both imports and exports came in strong than anticipated. China’s economic recovery is barreling along and chatter has increased regarding a potential Yuan appreciation. The FX markets have been pretty quiet the last couple sessions, but that could change during tomorrow’s Asia trading session. China will print another key data set and Australia will reveal important employment figures. Additionally, the U.S. will release its own Trade Balance along with weekly Unemployment Claims. As a result, activity could pick up for the remainder of the trading week, particularly since the U.S. will release retail sales data on Friday.

Technically speaking, the EUR/USD faces multiple downtrend lines along with 3/8 and 3/3 highs. Our 4th tier downtrend line could serve as a key resistance since it runs through 2/9 highs, or the 1.38 area. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/5 and 3/2 lows. Meanwhile, the psychological 1.35 area could continue to have an impact on price movements.

Present Price: 1.3616

Resistances: 1.3637, 1.3654, 1.3672, 1.3691, 1.3713, 1.3733

Supports: 1.3606, 1.3591, 1.3574, 1.3557, 1.3542, 1.3528, 1.3511

Psychological: March and February Lows, 1.35

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