EUR/USD: 1.2530
The Euro is slightly softer today in what has been a thinly traded session due to the US holiday and many players have stood on the sidelines, awaiting the outcome of the ECB Interest rate decision later on today. The currency was not helped by the German Services PMI which fell below 50 to 49.9, into contraction mode, and saw the Euro fall to a session low of 1.2508, before a mild bounce. Otherwise things have been quiet, and little should be expected until the ECB announcement, where a 25bp cut is largely written in.
With comparatively little going on, the Euro looks as though it will be in a 1.2500/1.2570 range for the next few hours and we are once again back to using 1.2520 as a pivot, with the indicators now suggesting that it will be the downside that may come under pressure. The Euro is currently sitting just above the Fibo level of 1.2525 and it maybe that this holds for now. A break below 1.2500 though, would suggest a further decline towards 1.2465 (61.8% of 1.2288/1.2746). Beyond there would suggest a return to 1.2406 (28 June low). Although the 4 hourlies are pointing in this direction, the shorter term oscillators are actually fairly non committal, so I would not be looking for too much of a directional move until the ECB announcement.
The upside would take us back to meet the sellers lined up above 1.2600, and then on to 1.2640 and the 29 June high at 1.2690, which doesn't look likely to be seen.
All up don't be looking for anything directional until the ECB and then go with the flow. With the dailies continuing to run along completely flat lines, more choppy action around current levels looks like the most probable outcome, but with a preference to use any strength above 1.2600 to join the offers with SL to be left above the 1.2692, 29 June high.
ECB aside, today also sees German Factory orders, the 10Year Spanish Bond Auction, and from the US we get the ADP employment data, ahead of tomorrow's NFP/Unemployment Figures (exp +90K, 8.2%)..
