EUR/USD: 1.3300
The Euro moved a bit lower in early Europe and then drifted sideways throughout the session, ahead of the EU Fin Min meeting and the Spanish budget, due to takes place today, but ultimately recovered to the 1.3300 pivot. The market remains nervous of how far Spain will be willing to go in order to impose the required austerity measures in the face of Union pressure against the reforms. A General Strike is underway today in protest at the measures. Italian and Spanish bond yields rose, despite a solid Italian bond auction ahead of the budget. The budget is due to make around Eur 35 bio in spending cuts and will cut a fine line between austerity and economic growth prospects.
In Copenhagen the EU Finance Ministers will discuss of the proposed bailout fund, amongst other things such as the proposed Financial Transactions Tax. Germany’s finance minister, Wolfgang Scheuble, said the bailout fund will be boosted to €800bn, with help from the (IMF). The Dax was down 1.8% and the CAC -1.4%. The Shanghai Composite B yesterday was down 1.4%.
Elsewhere, German Unemployment dropped to 6.7% in March from 6.8%, US Q4 GDP was unrevised at 3.0% annualized and Initial jobless claims rose to 359k, maintaining its recent positive trend.
Technically there is not a lot to add today and it will be pretty steady until we see the outcome of some of the major events of the day. The Euros main move of the day was the 50 point drop early in the European session. The low was at 1.3250 and it has since spent the day squeezing back towards 1.3300. The 4 hour charts are currently suggesting that any gains above 1.3300 will be difficult to sustain. 1.3340 and 1.3370 are the immediate topside hurdles, and above here the weeks high of 1.3388 looks unlikely to be seen for now. To the downside, below 1.3250 would probably lead to 26 March low at 1.3186 and then on to rising trendline support at 1.3100.
The daily charts are pretty much undecided, so given the continued neutral stance; SL on either side should be kept pretty tight. Asia’s range will probably be within the 1.3260/1.3310 area, but I suspect the greater interest will be to sell into strength before Europe gets in and anxiously awaits the outcome of events later in the day
Later on we also get EU Retail Sales, Michigan Consumer Sentiment Index and US Personal Income/Spending.
