The Euro came under renewed pressure in Europe following the ECB monthly report which cut the growth outlook again, expecting  a  0.3% contraction this year and then growth of 0.6%  in 2013, down from the previous 1% estimate. Inflation is tipped to decline to 1.7% next year with the longer term outlook remaining at around 2%.

Adding to the concern, early in the session was the increasing pessimism that the ECB may not act with sufficient vigour to solve the funding crisis currently going on in Spain and Italy. On top of this the euro was under pressure today against some of the Scandinavian currencies, pushing towards a 12 year low against the SEK (Sweden) and a 10 year low against the NOK (Norway).

Things turned around somewhat following the ECB report when Board member Christian Noyer suggested that the Central bank will be ready to act "very soon" to intervene in the markets, "prioritising the short-term debt markets". He also said that their operations will be " of sufficient size to have a strong impact on the markets". This helped the Euro back off its lows and it currently sits fairly close to 1.2300.

Technically, we have now taken out the stops that were building up below the Fibo support at 1.2290 (38.2% of 1.2042/1.2442),  although the 1.2242, 50% pivot remains in place. With the 4 hour indicators still pointing lower this could yet come under pressure, below which would target the rising trendline at 1.2200.

I would be doubtful of the market taking the Euro too much lower than 1.2200 right now, just in case the ECB actually manage to back up the comments of Noyer and Draghi. If the ECB can pull the rabbit out of the hat with a plan to alleviate the borrowing costs of the Club Med countries, the Euro  would see a sharp bout of short covering and thus I don't think we should expect too much until they provide a little more direction.

The topside will now sees sellers at around 1.2375/85 where the Euro topped out today, and then 1.2440 should remain pretty strong. Above this, 1. 1.2470 is 61.8% of 1.2740/1.2042 and then 38.2% of 1.3282/1.2042 is at 1.2510. In the longer term 1.2707 acts as  (38.2% of 1.4935/1.2042).

Today's economic data  is relatively quiet and will comprise the German CPI but not a lot more.