U.S. Forex Preview-EUR/USD At Support

Tuesdays are among my favorite days of the week to engage the markets. Monday is often defined by moderate participation levels and trader preparation. In many instances, Tuesday is an ideal time to capitalize on enhanced market volatilities. For the U.S. Indices and EUR/USD, today has provided ideal short-term trading conditions.

U.S. equities continue to boom, with the DJIA up over 125 points and the S&P 500 nine. Sellers have applied sustained pressure to the EUR/USD, creating a dramatic 50 pip ssell-off WTI crude oil has continued to show its strength, posting over a 1$ gain ahead of this week’s inventory cycle.

As we approach midweek, the economic calendar is heating up. Here are some of the events to watch for the coming 18 hours:

Country                              Event

Australia                             National Bank’s Business Conditions (Dec.)

China                                  CPI (Dec.), PPI (Dec.)

U.K.                                    Industrial/Manufacturing Production (Nov.), NIESR GDP (Dec.)

Germany                            10 Year bond Auction

U.S.                                    API crude oil stocks, Import/Export Price Index (Dec.)

In addition, tomorrow’s EIA energy report is likely to shake up oil valuations. We are currently seeing considerable strength in WTI crude. If oil stocks come in higher than the estimate of -4.100M barrels, price is likely to test the key downside psyche level of $60.00 by week’s end.

EUR/USD Technicals

My colleague Skerdian covered the downtrend in the EUR/USD a bit earlier in the session. If you haven’t already, check out his update for insights into the fundamentals behind the move.

For the past three sessions, the EUR/USD has been alive. Large daily ranges and high levels of participation to the bear have driven price to an area of support on the daily timeframe.

Yesterday’s U.S. overnight preview alluded to the strong possibility that the EUR/USD would test 1.1900. Today’s intraday low of 1.1914 is a proximity test of this level, with price trading around the 1.1925 quarter-handle.

Here are the support levels for the remainder of the U.S. session:

• Support(1): 20 Day EMA, 1.1928
• Support(2): Bollinger Midpoint, 1.1918
• Support(3): Daily SMA, 1.1834

Bottom Line: Thus far in the session, the Bollinger MP has proved to be valid support. However, with such a steep downtrend on the daily chart, I am not inclined to take a long from the current position. In the event that we get a definitive break below 1.1900, a premium buying opportunity from the Daily SMA is likely to develop for later in the week.

Until then, check out the signals page for trade ideas facing a broad spectrum of asset classes. Remember, trade smart and for tomorrow!