EUR/USD: 1.3158It was a volatile day today, after poor data all round ensured that neither the Euro nor the Dollar was able to take full advantage of the economic situation, although the Euro is 70 points lower than this time yesterday. First up, EU Unemployment rose again, to 11%. The manufacturing PMI was ghastly, revised down from 46.0 to 45.9 in April, against March's 47.7, and was the lowest reading since June 2009. This was followed up by data from the US that showed the ADP employment report on private sector jobs growing by 119k in April, against expectation of 175k. At the same time, March data was revised down from 209k to 201k. None of this bodes very well for the NFP/Unemployment report, due on Friday and ensures that the US Dollar is not going to gain too much ground against the other currencies.
Equity markets did not much like what they saw with the DAX finishing -0.75% and the S+ P -0.3%
So neither currency really took advantage of the situation, and the pair remain trapped in the descending triangle formation, although things do not look pretty for the Euro ahead of the ECB meeting and Draghi’s’ press conference later today, prior to the French and Greek elections on Sunday. German bunds yields hit record lows today on safe haven concerns. The ECB is expected to keep rates unchanged, but with the added possibility of a cash injection (more LTRO?) to the banks that would be seen as Euro positive in the short term.
So overall, we are back in the middle of the longer term 1.30/1.33 range, with the charts looking as though there is room for more downside pressure ahead. The one hour charts are a little oversold and until the correct themselves, we should be able to hold the day’s lows at 1.3121. The 4 hour charts though look as though a retest of 1.3131 (50% of 1.2994/1.3270), 1.3121 (session low) and 1.3096 (61.8%) may be in line. Below here, the 18 April low is at 1.3056, where the 76.4% Fibo level of the 1.2994/1.3270 also lies. Below here, although unlikely there are plenty of bids in the 1.2970/1.3000 area and we won’t see this today. It should be noted though, that there was good options interest today, to buy June 1.2600 puts.
On the topside, there is plenty of resistance, starting at 1.3182 (38.2% 1.3283/1.3121), and then above here at 1.3200 (50%), 1.3220 (61.8%) and at yesterday’s high of 1.3283.
Until the ECB later on, which will be followed up by the US Jobless Claims, do not expect too much, but at some stage a look at the bottom of the triangle looks to be the best bet.
