EUR/USD: 1.2355The Euro is a bit higher today after comments from Angela Merkel, on returning from holiday, appeared to give her support to the recent comments of Mario Draghi that the ECB will do all that it can to defend the interests of the EU. She noted that Draghi's comments were broadly in line with the requirements of the euro zone leaders, which suggests that Germany may be supportive of the ECB buying the bonds of Italy and Spain and added that time is short and that the EU needs to act quickly. This was enough to bring the Euro up from its lows of the week, although given that the entire weeks range has so far been 1.2255/1.2385, it is all rather uninspiring stuff.
The Equity markets generally had a good day following mildly softer US data (reviving hopes of QE -again!) and the S+P continues to grind towards its 1422 target. Today has seen it close +0.7% at 1416. Earlier the DAX finished +0.7% and the EStoxx50, 1.08%. US Treasuries had a volatile day but yields finished strongly at 1.84%, which did nothing to hurt Usd/Jpy.
Elsewhere today the EU CPI data remained at 2.4% yoy in July, staying above ECB's target.
Technically, although we are now near the top of the weeks range, not an awful lot really has changed. We are currently struggling to make sustained progress above the 1.2363 level (61.8% of 1.2442/1.2240) and have yet to see the weeks high of 1.2385. The oscillators are really not suggesting very much at all and it could be a pretty quiet end to the week. I still vaguely prefer the upside, although right now am not overly convinced that it will make too much progress and sellers will be seen at 1.2400, and again at the 1.2442 high following Draghi's comments on 7 August . Above there sees 1.2472 (61.8% of 1.2742/1.2042). The neckline resistance is currently at 1.2525, and then 1.2574 (76.4%).
On the downside, the channel base at 1.2255 held nicely, before the bounce. Minor support before then should now be found at 1.2315, and right now 1.2255 doesn't look to be in too much danger. Any negative comment could quickly change that, and a break would see a test of minor support at 1.2215 and 1.2200. More important support would then be found at the 2 August low of 1.2133.
Today's economic highlights are the German PPI and the US Reuters/Michigan Sentiment survey. It could all be a bit of damp squib to end the week, but overall, joining bids into dips looks a though it may be the way to go.
Good luck. Good w/e.
