EUR/USD: 1.3080The Federal Reserve meeting did much as expected today, leaving rates unchanged and noting the mild pickup in the economy, as well as the rise in inflation due to the price of oil and gas. They also noted the mild improvement in unemployment, while at the same time noting that it remains at elevated levels. Earlier, Retail Sales posted a gain of 1.1% in February, slightly above expectation. Overall the slightly more upbeat outlook on the economy has done nothing to hurt the US Dollar or the equity markets.
In Europe, much stronger economic confidence through the ZEW survey boosted equities (Dax+1.4%, CAC+1.7%) but gave little assistance to the Euro.
The Euro saw its session highs in Asia yesterday at 1.3190 and then spent the rest of the day declining to as low as 1.3052(50% of 1.2623/1.3485). The Fed announcement saw some volatile trade within 1.3070/1.3120, but ultimately did little to make new ground either way on the day.
The support is currently holding and it may well continue to do so. The divergence on the 4 hour charts are suggesting that we may continue to bounce around here with the possibility of another move back to the 1.31/1.32 range.
If we do break lower though, the next target would be the previous low at 1.2970. Although that looks unlikely at present, the dailies are definitely pointing in that direction and a trade at that level in the next few days would not surprise. In the meantime it looks as though we
should leave room to sell rallies, where 1.3150 and then 1.3195 provide short term resistance.
Today’s economic highlight will be the EU CPI, but little from the US.
