The EUR/USD recovered from intraday losses yesterday after balancing along our 1.2971 support. The relative strength of the Euro is reflected in the EUR/GBP and came despite a late selloff in the U. S. equity markets.

Investors took kindly to the public address by the ECB yesterday. The ECB explained there is little room for further interest rate reductions, implying the central bank may cut one more time and keep the benchmark rate steady.

However, the wording is not definite and gives the ECB leverage to alter their monetary stance if deemed necessary. The EUR/USD also found strength in the fact that the IMF aims to double its account balance to aid emerging economies.

Since the Eastern European economies have been weighing down on the EUR/USD this year, the planned action by the IMF provides a little more breathing room.

Although investors continue to dabble in risk-oriented investments such as the EUR/USD, the weakness of the German Economy sticks out like a sore thumb. Germany will release its economic sentiment data this afternoon, giving investors a rounder picture of the depth of the extent of the downturn in the EU's largest economy.

If the economic sentiment in Germany is worse than expected, we foresee further consolidation due to the psychological role of 1.30. Regardless, the momentum still lies in the corner of the bulls with the EUR/USD edging above our 3rd tier downtrend and the breeding ground for a large near-term breakout within reach.

Fundamentally, we maintain support of 1.2971 with additional supports resting at 1.2934, 1.2910, and 1.2871. To the topside, see resistance at 1.2991 with additional resistances hanging at 1.3022, 1.3058, 1.3086, and 1.3120. The EUR/USD is currently exchanging at 1.2993.

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