EUR/USD Continues its Surge After Positive Global Data

The EUR/USD has rocketed past all of our previous downtrend lines, bursting out of the gates sooner than we had anticipated. Investors are shrugging off the much weaker than expected retail sales data out of Germany, choosing to focus on the U. S., China, and Britain instead. All countries released stronger than expected manufacturing PMI data points, with Britain’s registering growth (50.8) for the first time since May 2008. The higher than expected PMIs bode well for the EU’s large manufacturing sector. The EU should benefit as the global economy pieces together consumption, so the EUR/USD is benefitting from today’s wave of positive news.

Investors are continuing their return to risk, resulting in a broad-based depreciation of the Dollar. The EUR/USD is setting new 2009 highs, locking its sights on the psychological 1.45 mark, the next psychological barrier. The EUR/USD appears to have some more near-term upward mobility since the currency pair has leapt past our downtrend line forming through September 22nd and December 18th highs. These highs are the next points of heavy resistance, yet they reside around the 1.47 zone. Hence, it’s clear this rally has legs. Speaking of which, the EUR/USD is registering large volume on the buy-side, indicating bulls are putting their money where their mouth is.

Despite the rampant optimism, the S&P futures are trading at 1000 mark right now. While the flood of today’s positive news could send the futures past 1000, it’s difficult to believe this highly psychological level won’t put up a good fight once it’s breached. Therefore, the EUR/USD could hit a wall soon and consolidate should the S&P futures behave as we suspect. There is a ton of important U. S. data left to be seen over the next two days, and investors may want to wait and see how the other indicators fare. Data will be relatively quiet on the EU front until Thursday’s ECB monetary policy decision. However, should U. S. and British economic data outperform leading up to the meeting, the EUR/USD may already price in a neutral/positive result from the ECB. Regardless, the EUR/USD is making a clear case for its uptrend, giving a green light. It would take a very large, negative shock to derail the recovery in the EUR/USD.

Present Price: 1.4413

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