The EUR/USD has recovered well from Monday's lows despite a lower than expected CPI Flash Estimate. The large movement upwards is a bit confusing considering declining prices imply the ECB may need to get more aggressive with its monetary policy at Thursday's meeting.

Analysts are expecting the ECB to lower its benchmark rate to 1% and the use of quantitative easing is on the table. Monetary easing is normally negative for a currency, hence why the surge taking place this morning is a bit out of place.

As a result, we view the appreciation of the Euro against the Dollar over the last 24 hours as buyers taking advantage of oversold conditions. On an encouraging note, for those long the EUR/USD the currency pair didn't even come close to the psychological 1.30 level and our 1st tier uptrend line. Therefore, the short-term uptrend is still in play.

The defining point for the uptrend will be whether the EUR/USD can brave above our 2nd tier uptrend and medium-term downtrend lines. The U. S. will release the Chicago PMI and CB Consumer Confidence data today. However, all eyes will be on U. S. equities to see if the S&P futures can recover from yesterday's large selloff.

We anticipate the positive correlation between the EUR/USD and S&P futures to continue until Thursday's ECB meeting. Fundamentally, we find supports of 1.3291, 1.3253, 1.3205, 1.3162, and 1.3124. To the topside, we see resistances of 1.3334, 1.3366, 1.3409, and 1.3446.

The 1.35 area serves as a psychological barrier with 1.30 acting as a heavily-weighted psychological cushion. The EUR/USD is currently exchanging at 1.3308.

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