EUR/USD resumed the longer-term bearish trend after key data was released from both Europe and the United States, but price was unable to break the 1.08 handle. Earlier in London, the euro rallied from the open low of 1.0819 to 1.0870 after euro-are economic sentiment climbed to the highest level since fourth quarter of 2011. European business activity also improved to a 46-month high. The ECB’s action are providing optimism that growth will continue to stabilize.
In New York, EUR/USD remained near the session lows despite an attempt to rebound higher after US personal spending only increased by 0.1%, only a modest improvement from the prior consecutive -0.2% declines. Personal incomes did rise 0.4% in February and pending home sale improved 3.1% last month.
The EUR/USD daily chart shows that rebound from the March 13th low of 1.0461 was unable to test the 50-day SMA and is currently falling below key trendline support. With price tentatively finding support from the noted 1.08 handle, we will look for a breach of that level to possibly trigger an immediate drop to the 50.0% Fibonacci retracement level of the mid-March rebound. Further downward momentum may target the 1.06 region. Medium-term downward targets include the 1.01 -1.03 zone.
The trade: Sell EURUSD at 1.0850 with a stop loss at 1.0910 and a take profit at 1.0730. The Risk/Reward Ratio is around 1: 2
Edward J. Moya
WorldWideMarkets Online Trading