EUR/USD 1H Chart 7/4/2012 10:22AM EDT
The EUR/USD drifted lower from 126.20 area during the 7/4 Asian and European sessions, as anticipated in the previous update. As we get into the July 4 Independence day lull in the US session, the EUR/USD has made a new low for the week, sitting at the 1.2545, 50% retracement level seen in the 1H chart. The currency pair has so far respected a declining trendline for the week, but is also respecting a projected support, which holds it in a declining wedge pattern.
The 1.2540-1.2550 area should provide support during the US session if the market continues to be in consolidation mode ahead of tomorrow’s Spanish 10-yr bond auction and ECB policy meeting/press conference. However note that the bearish consolidation in EUR/USD as opposed to the flat one in GBP/USD and the rising channel in AUD/USD, is due to the dovish expectation that the ECB will cut rates.
Still the downside for now should be limited to the 1.2520 pivot and 1.2513, 61.8% retracement level. The upside is probably limited as well in a low liquidity environment without much event risks during the 7/4 session.
GBP/USD 1H chart 10:30AM EDT 7/4/2012
The GBP/USD continues to be trapped in a range with resistance at 125.45. Support is shown by one pivot at 124.26. As the 7/4 US session progresses, the currency pair is sitting around 124.50, on the 200-hour simple moving average.
Over the 7/4 European session, we got UK Services PMI data, which indicated that in June, the service sector still expanded, but at a slower pace. The reading was 51.3 vs. forecast of 52.9 and previous reading of 53.3, so it was slightly disappointing.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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