The consolidation of the EUR/USD continues while the currency pair weakens Monday due to a much weaker than expected Trade Balance combined with a downward revision of the last release.

A declining Trade Balance reflects the weakness in Germany's production and manufacturing as exports decline and imports rise. Despite the seesaw behavior over the last few sessions, we anticipate the return to volatility shortly.

Last week's movement was historical and should result in refractions for the days/weeks ahead. Last week's flurry of news from the Federal Reserve greatly distracted investors from the underlying economic fundamentals. The distraction will continue today as Treasury Secretary Geithner reveals America's plan for dealing with toxic assets.

However, investors' sights are returning to the state of the EU economy. The shape of the EU economy will come back into focus Tuesday with the EU releasing a concoction of PMI and trade data.

While we may witness some more near-term consolidation to the downside today, the EUR/USD remains comfortably above our 1st tier uptrend line and downtrend lines. Therefore, the momentum has clearly shifted to the upside, and we anticipate this trend to continue until the currency pair reaches the psychological 1.40 level.

Fundamentally, we maintain our supports of 1.3554, 1.3494, 1.3427, and 1.3371. To the topside, we hold our 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 1.3586.

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