EUR/USD: 1.3175The Euro finished higher on Friday after advancing sharply as investors sold the US$ on the news that CPI and industrial output data came in a little softer than expected, reminding the market that any economic recovery is going to hit bumps in the road, particularly with oil prices on the rise and looking as though they could head higher.
The Michigan Consumer Confidence index added to the disappointment with a reading of 74.3 for March, below expectations for a reading of 75.7.
The softer data took a littleof the pressure out of the bond market with yields easing back a little, reducing the attractiveness of the dollar on the day.
For the coming week, it looks as though we may see some consolidation and possibly a little further weakness ahead for the dollar. The DXY (Dollar Index) has turned around sharply and looks as though it could head a little lower, within the greater overall uptrend that currently exists.
Technically the Euro looks as though further short term strength towards 1.3290 (8 March high) could be seen. Unless this level was broken though, the overall downtrend should resume eventually. Should we see 1.3290, and take it out, the Euro would then be likely to target 1.3370 (76.4% of 1.3485/1.3002) and possibly 1.3485 itself. This is not the preferred view at this stage. More likely is an eventual resumption of the Eur downtrend and we need a return to levels below 1.3048 (Fridays low), to enhance the case for further losses. If/when we do go below here, expect the Euro to target 1.3002(Thursday low) and then to 1.2970 (16 Feb low).
Early in the week, expect some range trading with a mild short term upside bias. The 4 hour charts have some positive momentum, although the one hour charts are at overbought extremes following Fridays rally. It should therefore be a pretty quiet start in Asia as the charts unwind, and given the lack of data, this may continue into Europe.
Monday sees the EU Current Account, but the highlight for the Euro will be the PMI data (Thur). There is very little out of the US with Jobless Claims (Thurs) being the highlight.
All in all it looks like being a consolidative week and at this stage it looks as though the range of 1.3000/1.3300 should continue to contain it.
