EUR/USD: 1.3080 The US$ has eased back a little after hitting a 1 month low earlier in the session of 1.3004. US Treasury yields turned around a little today, heading slightly lower which provoked some dollar selling. This has pushed the Euro back above 1.3100 (high 1.3119) as short term stops got set off and produced the bounce that we suspected might occur. This happened despite generally solid US data where initial/continuing jobless claims fell to a 4 year low and manufacturing activity has picked up, as evidenced by both the Philadelphia and US Empire State Mfg Indices, which contrasts sharply with economic activity in Europe.
Other than that there is not a lot to report today, other than that the SNB left rates and the peg to the Euro unchanged, which caused some volatility in the Swiss Franc.
Technically, the Euro looks as though it could squeeze a little higher and a test of trendline resistance at 1.3140 would not surprise. The hourly and 4 hourly charts have some positive momentum as well as some divergence and a further squeeze higher could eventuate. Further resistance will be seen at 1.3185 (38.2% of 1.3485/1.3004).
The dailies though, are not suggesting yet that we are likely to see any major turnaround in the fortunes of the Euro and once this short term rally has blown itself out, the down side may well resume. 1.3000 now has added weight as support, having been there earlier today. Below there, the important 1.2970 level lies ahead of 1.2950 (61.8% of) 1.2623/1.3485 and 1.2930 (25 Jan low). Data today will be highlighted by the US CPI. That apart the session is fairly light, in what will hopefully be a fairly easy run into the week end.
Today looks as though a range of 1.3050/1.3120 ought to cover the next few hours, at least pre Europe. Good luck and good w/e
