EUR/USD: 1.3215The Euro behaved pretty much as anticipated today. The rally reached a high of 1.3285 but failed to take out 1.3290 resistance and retreated sharply to a low so far of 1.3178. There was little news of note, and trading was once again mainly technically driven, although US existing home sales rose slightly less than expected to 4.59m annual rate in February.
Ahead tonight, the main event of the week as far as the Euro is concerned will be the PMI data. Investors will also look warily at Italy, where the government appears set on a collision course with the country’s biggest trade union after talks on reform to an employment protection law failed to produce a deal on Tuesday.
Technically the Euro is playing perfectly within the 1.30/1.33 range that we have spoken about all week. From here though, things look a little tricky and could go either way. It could be that we have come back to important support at the 1.3170/80 level and will use that as a level to bounce from to take another look at the topside to see if we can break above 1.3300. Above 1.3320 would see an advance to 1.3380 and then 1.3485. More likely though, judging by the momentum on the 4 hour charts, we will eventually break through 1.3170 for a look at the Fibo pivot at 1.3155 and then below here at 1.3090, followed by 1.3055 (50% of 1.2623/1.3485). Below here would allow a retest of 1.3000 and then 1.2970. If when we get under here, there looks as though we would see an acceleration towards the 1.2623 13 Jan low. It looks to me as though renewed strength will meet with good selling interest looking for the next leg lower.
Range today in Asia looks to be 1.3170/1.3240 with the PMI data likely to provide the next real direction.
