EUR/USD consolidates

After a sharp, swift sell-off, the euro has been consolidating over the past few sessions.

Source: Bloomberg

EUR/USD seems to be setting a base in the $1.1300 region as we head into a fairly busy week on the economic calendar. Starting today, we have manufacturing PMIs for Spain, Italy and the region. This will set the tone for sentiment, along with any fresh headlines out of Greece.

In the US we have plenty of Fedspeak, with five regional presidents, including Bullard, Lockhart and Rosengren speaking. President Obama will announce his budget proposals and we have US non-farm payrolls on Friday.

Following Friday’s disappointing GDP reading, it seems the market is pricing in a degree of cooling in US data, which has been running hot recently. However, from a price-action perspective, EUR/USD remains in a downtrend, with resistance coming in at around the $1.1350 region.

This downtrend resistance line has been in place since December and has managed to cap the price action through January. Until we see a close above this level, I would continue to favour shorts on strength.

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