EUR/USD Daily Commentary for 4.29.09
The EUR/USD is flying, bolting through all three of our downtrend lines after bouncing off our previous 1.2987 support. Investors came in defense of 1.30 with serious volume. The currency pair is presently testing April 24 highs and it appears to have more room to run should today's data from the U.S. come in positively. The EUR/USD's considerable strength is rooted in better than expected earnings from Spain's Santander, the EU's largest bank. Since we are in a financial crisis, positive earnings from banks can be a real driving force. However, all bets are off until the currency pair can plow through April 24 highs towards April 13 highs.
The sustainability of the EUR/USD's momentum will rely upon today's Prelim GDP number from the U.S. Therefore, keep an eye on the S&P futures since the two investment vehicles are positively correlated. If the S&P can break out of April highs, we expect the EUR/USD to follow suit. On the other hand, if the GDP data disappoints, we could see the EUR/USD buckle into its downtrend.
Altogether, the fact that the EUR/USD has rallied from 1.30 is a very positive sign for the uptrend. April 28 lows were comfortably above April 21 lows, and the EUR/USD has popped through our 3rd tier downtrend line. Therefore, the ingredients are on the table for a sustainable rally.
Fundamentally, we find resistances of 1.3261, 1.3329, 1.3389, 1.3420, and 1.3470. To the downside, we see supports of 1.3236, 1.3208, 1.3170, 1.3127, and 1.3089. The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3268.
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