EUR/USD: 1.2260
The Euro has traded cautiously today, ahead of Thursdays EU rate decision and the Press Conference from the ECB head, Mario Draghi. It generally lost ground though on worries that any ECB action may not be sufficient to contain the debt crisis and never looked as though it was going to regain Fridays 1.2390 highs against the Dollar. On the crosses, Eur/Aud, in particular made a new all time low , this time at 1.1652.
Equity markets had a better day of it, with the DAX closing +1.27%, EStoxx50 +1.8% and the CAC +1.24%. These all shrugged off the soft EU data today, where the Italian auction, Spanish GDP and Eurozone confidence indicators all weighed on the Euro. The S+P was unable to follow through on Fridays gains and closed -0.05%.
There has been little else of consequence to report today from Europe, and ahead of the ECB and also the FOMC meeting Tues/Wed, we are likely to see these conditions continue.
US Treasury Secretary Tim Geithner has been meeting with German Fin Mon Scheuble, although their press release said little, aside from the usual platitudes about having confidence in the EU and the ability to move towards closer integration.
Technically, the 4 hour charts continue to slowly unwind their overbought conditions from the end of last week. This looks as though it is likely to continue and a slow sideways/lower drift appears to be in store for the coming session.
Immediate support, below the session low of 1.2225 should be seen at 1.2217 (50% of the recent rally from 1.2042/1.2390). Beyond that 1.2175 and 1.2124 (61.8% + 76.4%) should provide backup support today. On the topside, 1.2310 should provide a cap, above which we would begin to look at 1.2340 and then 1.2390, but which looks pretty unlikely right now.
I would not get too excited about the session ahead, although we do get plenty of data out that may provide some short term volatility later in the day. Right now though look for 1.2230/1.2290 to cover it.
Highlights today will be : German Retail Sales, Unemployment, EU CPI, Unemployment, US Personal Income/Expenditure, Case Schiller Home Price Index, Chicago PMI, Consumer Confidence.
