EUR/USD: 1.3110In thin trade, the Euro has climbed slightly higher today, currently sitting just above 1.31 as the effect of the Good Fridays poor NFP number recedes. With Europe still closed we are unlikely to see any real action until later on today.
Looking ahead, we have various Fed members speaking through the week, starting with Bernanke today, – 9.15 AEST – and the market will still be keeping an eye out for any mention of further accommodative policy (QE3) following the NFP data, despite this apparently being taken off the agenda in his comments, early last week. It will also be the start of the Wall Street earnings season.
The US$ is generally a little softer all round today and both Treasury yields and Equities are lower. We have got through Easter without any major distraction from Europe, although the poor Spanish bond auction last week will keep the market on its toes for further negative news lying around the next bend.
Technically, the Euro looks as though it is on the verge of a decent move. The Head-Shoulder formation has more or less reached the point where it needs to go one way or the other. It has been much talked about and I would not be jumping the gun yet in looking for a break lower. The neckline is at 1.3035. A move below here would be a different matter and would lend confidence for a move to the objective at 1.2523. Until then stay flexible. In Asia today it looks as though 1.3080/1.3165 should cover it and until Europe return from Easter I doubt we are going anywhere fast. Further short term resistance levels are at 1.3205 and at 1.3240. On the downside, a break below 1.3035 would see 1.3000 and then 1.2970 (16 Feb low)
There is little data out today and the German Trade Balance will be the highlight. Before then, in Asian time zone China will release its Trade Data. Don’t expect too much before Europe gets going unless Bernanke takes the market by surprise during Asia trading.
