EUR/USD: 1.2290
Fed chairman Ben Bernanke has given his testimony to Congress, and while he said that he was prepared to act to stimulate the US economy, he gave little hint of any immediate action and certainly did not mention QE3.
Risk currencies and equities immediately took a dive, but the overall dovish tone of his comments have since seen them make a comeback to currently trade largely unchanged from yesterday. The hope is that the Fed may yet act, given that the US economy has weakened significantly and may well deteriorate further due to the ongoing crisis in Europe.
Equities have suffered no eventual damage on his comments, although there was a brief spike lower, with the Dax finishing +0.68%, Estoxx50 +0.58 and the S+P is +0.75%.
The Euro saw a quick fall to 1.2188, having earlier traded to the session high of 1.2316, and now lies pretty much unchanged on yesterdays levels.
Earlier in the day German Investor confidence took a bit of a hit when the ZEW survey fell for the 3rd month running, capping the Euro above 1.2300.
Technically, little has changed. Although the 1.2290 resistance was taken out, the next level of 1.2335 remains intact, before which, the minor down trend line is now at 1.2320. A move above this area would suggest progress to 38.2% of 1.2692/1.2162 trendline level at 1.2365, and beyond there it is possible to go on to 1.2425, the 50% pivot, but I don't think the market is yet ready for this.
The downside has a cluster of supports now between 1.2162 and 1.2185, and again I am doubtful that we take on these in the current session. A break though would head towards 1.2100 and then on to 1.2000.
With the hourly indicators giving little hint of any direction, it might be a day to stand aside and let the market do the work. Further out, the 4 hourly charts possibly have some upside momentum and the dailies look as though they are well supported on dips, so if I had to pick a direction I would say that we will see 1.2400 before we see 1.2150, but it is a close run thing. When in doubt, stay out.
More Bernanke today.
