The EUR/USD consolidated late Thursday and is experiencing some profit taking on Friday after the massive run in reaction to America's announcement of quantitative easing.

We view the present downward movement in the EUR/USD as healthy profit-taking considering the large gains logged in the prior 48 hours. As we stated in our previous post, Wednesday's jump in the EUR/USD was a tectonic shift in trend and traders should keep this point in mind.

While there are a few more downtrend moving averages lying in the distant future, the near-term has a clear runway to the upside unless the currency pair should drop below our downtrend line. If the EUR/USD can clear 1/8/09 highs and our 2nd tier uptrend line we expect a near-term rally towards our 3rd tier uptrend line.

Therefore, while the medium-term has some landmines, the near-term outlook for the EUR/USD is rosy. The EU released Industrial Production and German PPI this morning, each showing a relative recovery with a possible reversal in trend.

However, we cannot forget the horrible manufacturing and production data Germany released last week, and we will have to wait and see if this seeps into higher unemployment and lower consumer sentiment.

The U. S. will not release any heavily-weighted economic data today and the EU will take a breather until a busy Tuesday of next week.

Fundamentally, we see supports of 1.3554, 1.3494, 1.3427, and 1.3371. To the topside, find resistances of 1.3624, 1.3688, 1.3724, 1.3800, and 1.3848. The 1.35 area becomes a psychological cushion with 1.40 serving as a highly psychological barrier. The EUR/USD is currently exchanging at 1.3605.

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