EUR/USD: 1.2940The Euro steadied itself today as Greece averted an imminent funding crisis after the EFSF agreed to release the scheduled payment of the bailout package. The allocation allows the country to meet its immediate debt repayments and halted the eight-day sell off. Elsewhere there was little new news to drive markets as Greek politicians continue to attempt to find some sort of consensus in order to govern the country, although the end result still appears to be another election and the fact that Greece will either leave the EU zone or default altogether. That remains to be seen, but in the meantime the Euro has had a day of consolidation, currently trading above the week’s lows, at 1.2930, having traded a 70 point range.
Angela Merkel has reiterated Germany’s stance on the EU crisis and has ruled out any change to the current drive to cut costs and insists on following the agreed austerity programme. The other indebted EU nations are looking to move away from this, in order to drive a growth led strategy out of the current predicament. Meanwhile, as Greece attempts to work out who is able to govern it, with another election is looking inevitable, unemployment continues to rise, now reaching 22%.
There is little to add from a technical perspective. The Euro continues to struggle but is holding above the week’s lows, without any real sign of a bounce, and continues to hug the 61.8% support level at 1.2950 of the move from 1.2623/1.3485. While the overall trend remains lower, be wary of a bounce, driven by short covering, and which would help alleviate the oversold nature of the 4 hour charts. For now, the recent 1.2910 low remains the immediate short term support, and below here 1.2868 (20 Jan low) should see buyers, ahead of the next Fibo level (76.4%) at 1.2825. On the topside 1.2995 is the first Fibo resistance (23.6% of 1.3283/1.2910), ahead of 1.3050 (38.2%) and 1.3078 – Chart gap. The downtrend line is currently at 1.3025 and it would not surprise to see the Euro drift towards this before turning lower again.
Little is likely to happen now until the German CPI data later in the day, which will be followed up later on by the US PPI. Other than that, apart from the China CPI there is little to go on, so with luck, it will be a quiet Friday! Have a good w/e.
