EUR/USD: 1.3190Despite a more confident outlook on the EU economy from the ECB Governor, Mario Draghi, weaker PMI data, first out of China and then from Europe drove the dollar higher today as concern about global growth came back into focus. This was backed up by the jobless claims in the US, which fell to 348k in the week and continues to show the slow but sustainable improvement in the US job market. The Euro was not helped by data from Ireland that shows that it .has slipped back into recession.
Equity markets did not like it one bit. The Dax and CAC were both down around 1.5% and the S+P is down 0.9%.
Technically the dollar did pretty much as we hoped. Following a mild Asian squeeze to 1.3250, the Euro finally succumbed to the data and saw a low of 1.3133 before a bit of a short covering bounce to the 1.3180 area.
From here, the hourly charts are once again recovering from an oversold scenario and it looks as though Asia will do little, and may possibly take the Euro mildly higher. The 4 hour charts though are pointing lower still and I suspect that we may want to look at 1.3080 later in the session or early next week. The dailies are running pretty flat though, so, in the long run it would appear that the 1.30-1.33 range will be with us until well into next week.
In the near term, a move back above 1.3200 now would suggest a return to 1.3250 and beyond there to 1.3290, and while this is possible, it is not the favoured scenario. I suspect the downside is the way to go, and below 1.3080, - should we see it - the obvious targets are the same old favourites around 1.3000 and then 1.2970. Given the lack of data today, it could drift into a quiet end to the week. Let’s hope so!
New Home Sales are the only data to look out for today. Have a good w/e.
