Euro : 1.2390
The Euro fell sharply today after the ECB, the Bank of England and Peoples Bank of China all lowered their key interest rates. The ECB cut to a record low of 0.75% and Mario Draghi’s Press Conference signaled that plenty of downside risk still lies ahead. Next up will be the FOMC when the U.S. Federal Reserve holds its meeting on July 31/August 1, while the Bank of Japan meets next week.
Assisting the dollar today and adding pressure to the Euro, was the ADP employment data that showed 176k growth in June, compared to expectation of 103k. The market will now await the Non-Farm Payroll/Unemployment data later on in the session, where the expectation is for an increase of 90K.
So the Euro had a tough session, with the Dollar Index (DXY) jumping sharply, and has now erased last week’s losses to currently sit at 82.82. It looks as though it wants to take on the recent 83.54, June 1 high, and above here would indicate that the US dollar is in line to make significant further gains, but that all lies ahead.
Technically the Euro looks as though a retest of the 1 June, 1.2288 low is now not too far away. The 4 hour charts are pointing sharply lower, and the dailies, which have recently been trying to turn slightly higher, in line with the recent rally, looks as though they might be turning down again. Right now, it is too early to say that that the Euro is starting a new downtrend and it may well be that more choppy sideways congestion lies ahead, although the outlook is not very pretty.
Below 1.2288 would eventually lead to the long term objective that we have been targeting for several months at 1.1875 (June 6 2010 low). Before then,- below 1.2288 -, the next real level of support is at 1.2150 (27 June 2010 low).
On the topside, sellers will be seen at the previous session low in the 1.2400/10 area and should we manage to get back above this, look for 1.2450 short term Fibo resistance and then 1.2520, which has been acting as a pivot, to provide a target. This looks some way away at this time, although a poor NFP reading later today could well change that, albeit that the ADP reading does not suggest that this will be the case.
In the meantime look for 1.2360/1.2410 to provide a guide.
