The Euro recovered sharply from last week’s strong downward move as concerns over Dubai World’s debt are now easing. As mentioned in earlier posts, the United Arab Emirates Central Bank said it will stand behind the local and foreign banks and will provide liquidity as needed.
Moves were seen to quell some fears, as investors moved back into riskier higher-yielding assets.
EU Flash CPI estimates, expect annual inflation to be 0.6% in November 2009 according to reports published by the Eurostat. In October, annual inflation was reported at -0.1%.
Ahead, traders will focus on U.S. stock market performance, as well as some key data that could alter risk sentiment.
In the U.S. session, traders will get a chance to see the latest Chicago PMI reading, followed in the Asia session with the Chinese Manufacturing data and the RBA rate decision.
Much focus will be centered on the Chinese data.
EUR/USD, extended recovery gains at the start of the week to reach and intraday 1.5084, for now. The pair now trades in a 60 pip range awaiting the NY session.
With the U.A.E. standing behind the implicated banks, the bias has turned slightly bullish. Caution, however, is still warranted as this week holds major key events including the ECB rate decision and the U.S. non-farm payroll report.
For the seventh time, EUR/USD was able to sustain above key support 1.4820, area that was able to hold up for the most part of November. With particular demand at such level, the pair should continue to edge higher upon confirmation of positive economic news throughout the week. Negative readings would likely test this level once again.
From current levels, 1.5050, the pair finds initial support at 1.5016, followed by 1.4955 and 1.4926.
Above current levels (1.5050), the pair finds initial resistance at 1.5085, followed by 1.5140 and 1.5194.
TREND
Near Term: Neutral
Medium Term: Neutral
Long Term: Bullish
Trading levels in play:
Limit Buy @ 1.4926 Targets: T1 1.4946 – T2 1.5140 Risk: 1.4879
* After 15 pips profit move stop to entry, take profit at will. Trade is canceled if it rebounds near entry and moves higher by 20 pips. Comments will follow if outlook changes.
Looks like a good place to buy… 1.4955 there also looks good, seems like a strong support.
I was looking at the same spot to buy 1.4950. But needless to say moves have been strong to both sides and I am staying aside today.
The 1.4955 level is a strong place that could provide some pips. It’s actually the 50.0% retracement of the latest move up from 1.4827 to 1.5087 (approx).