EUR/USD: 1.2815The Euro has largely had a pretty uninspiring session, but generally held on to Friday’s gains as equities rallied, with the Dax closing +0.95%, the CAC+0.65%. The S+P has just closed +1.6%, despite the turnaround in Facebook’s fortunes today and the market looks a little more confident in buying risk assets, or as in the case of the Euro, the market has simply exhausted itself , for the time being, on the downside.
There have been the usual soundbites from various interested parties on how to solve the issue in the EU, with Greece and Spain still front and centre in the markets focus. As usual, very little of lasting significance has been said and so the Euro has been largely rangebound, currently pretty much unchanged from the weekend close, although running a little higher towards stops above 1.2815, into the NY close.
Risk markets were mildly supported today following reports that Chinese Premier Wen Jaibao has urged for additional measures to support growth in China, which may be a hint of another upcoming cut in the RRR. We shall have to wait and see, but it has done nothing to harm markets today.
Focus will now turn towards Wednesdays EU meeting, where French President Hollande will promote the idea of Eurobonds – mutualised debt - , vigorously opposed by the Germans.
Technically not a lot has changed from the weekend. The upside currently looks to be struggling a little bit and today’s high at 1.2812 is the first target that needs to be overcome. Stops lie above here and a quick spike in early Asia would not surprise, albeit probably temporary. If we can overcome this, 1.2883 (38.2%), the minor gap at 1.2915 and 1.2960(50%) provides the Fibo objective, although this still looks too far away to come under pressure for the time being. The hourly charts suggest that we are in for another session of much the same sort of price action today. Although the 4 hours are back to neutral, they do still point higher, suggesting that we may yet see a more positive move to the topside.
To the downside, 1.2720 continues to provide a short term base, having seen a session low of 1.2724. Back below here would see a probable return towards Fridays’ 1.2642 low and then 1.2623. Lower down, 1.2575 (23 Aug 10 low) and 1.2505 (13 Jul 10 low) would attract, although I suspect the downside is limited for the coming session.
The next few days still look as though they are going to be pretty choppy, so be flexible and keep stops tight.
EU Consumer Confidence and then Existing Home Sales in the US today. Apart from that, not much.
Keep an eye out for the China Leading Economic Index in Asian trading hours
