Euro held up well, despite more bad news. Yen strengthened.

Euro : 1.2500

The Euro sank back below 1.2500 today as hopes of a positive outcome from the up-coming EU Leaders summit fade. Angela Merkel again reiterated her opposition to any form of mutualised EU debt, such as Eurobonds, and a German official stated that any change on the Greek bailout terms is unlikely to be announced at the coming meeting. On top of this, Cyprus has now officially asked for a bailout, having been earlier downgraded by Fitch, and Spain has formally asked for up to Eur 100 bio to assist their beleaguered banks.
 
All in all, not a particularly good day for the Euro, or the Equity markets come to that. The DAX fell 2.09%, CAC -2.24%, EStoxx 2.57% and in the US the S+P fell 1.6%.
 
Not helping the Euro today was the US new Home Sales, which bounced by 7.6%, the biggest jump in a couple of years and helped to underpin the dollar.
 
Even by recent standards, it has not been a helpful day for the Euro, but all things considered, it has held up reasonably well, currently at 1.2500, having seen a session low of 1.2470.
 
The hourly charts are suggesting that if we are to see more downside in the short term, it is going to be a choppy affair. The 1 hour chart (attached) is showing divergence and a bounce towards 1.2550 would not surprise.  As we spoke about yesterday, 1.2500/20 remains pivotal, and while that continues to act as a magnet, I think we should just expect some fairly choppy conditions. Ahead of the EU summit, it would be of little surprise to see this continue and unless there is an unexpected headline from the EU, I think the downside for the Eur is currently rather limited. For the Asian session, look for 1.2470/ 1.2520 to cover it.
 
Further out the 4 hour charts do suggest that the downside could eventually be tested but probably not yet. The dailies are fairly flat and given that following the EU summit, next week is a long w/e in the US (Independence day) and we then run in to the northern hemisphere holiday season and the Olympics, I suspect we are in for a prolonged period of fairly directionless trading.
 
The points to watch are at 1.2463 (61.8% of 1.2288/1.2743), 1.2432 (12 June low) and 1.2395 (76.4%).
 
On the topside, I doubt we will see 1.2550 quite yet (if at all), but if we do, the next target would be 1.2570, and then 1.2600.
 
Today sees Chinas leading Economic Index and then both German and US Consumer Confidence and the Case/Schiller home Price Index.