EUR/USD: 1.3025The markets have remained rather choppy today, but with the US$ generally stronger again, following yesterday’s retail sales and the Feds slightly more upbeat outlook for the US economy. Treasury yields soared, making the US$ a more interesting investment alternative, as opposed to its previous status as a cheap funding currency for other possible asset purchases. The 10 Year Treasury yields are breaking through their 200 DMA and look as though they have the momentum to continue higher, which will add to the attractiveness of the US$. There was little news out of Greece today, apart from the proposed resignation of the Greek Finance minister, ahead of election in the next couple of months. Elsewhere EU CPI figures were unrevised at 2.7% yoy and had little effect.
European equities generally followed through on yesterday’s enthusiasm with the DAX +1.2% and the CAC +0.4%. The S+P took a bit of a breather following yesterdays surge, finishing -0.12 %.
The pressure then has remained mildly lower for the Euro today, although progress has been slow. The range of 1.3010/1.3090 pretty much tells its own story, although once again it is finishing the session near its lows, and it appears the US$ strength is set to continue.
The Dollar Index (DXY) has broken above resistance at 80.35 and looks headed towards the next target at 80.85, with the oscillators picking up momentum for a potential move towards major resistance at 81.78.
Back to the Euro and it has broken through Fibo support at 1.3053 and currently sits just above 1.3000 psychological support ahead of important the 1.2970 level. This looks only a matter of time before it is tested. A break would then target 1.2950 (61.8$ of 1.2623/1.3485) and then 1.2927 (25 Jan low). The 76.4% Fibo target of the same move is at 1.2830, but this should take a while, barring another Greek tragedy!
To the topside, minor resistance at around 1.3075 is likely to hold in the very short term. Above this Fib resistance currently lies at 1.3120 and trendline resistance at 1.3170.
Be flexible here. Although the dailies are pointing lower, the hourly and 4 hourly charts are showing increasing divergence as we move lower, suggesting a bounce is in the pipeline. Don't get too short too early!
Today sees the ECB monthly report, EU unemployment, and from the US we get Jobless Claims, PPI and the NY State Empire Mfg Index.
