EUR/USD: 1.2350
It was pretty much a non-event again today, with the Euro trading in a narrow range on thin volume. This will continue into next week with trading being event driven .
Today, a weekend article in der Spiegel, that peripheral EU bond yields could be capped at a particular level above German yields gave the Euro an early underlying bid, but this was brushed aside by the ECB who suggested that it was rather misleading for a magazine to report on a decision that has not even yet been discussed.
That aside is has been very quiet and I would largely expect the same again today in the absence of any major economic data.
Keep an eye on Greece though. A decision is coming as to whether it will be able to stay in the Eurozone and the PM, Samaras is doing the rounds this week, meeting the EU leaders in attempt to buy time to carry out the required austerity measures. Comments from Finland on the subject, did not sound particularly positive, and ECB Board Member Asmussen said that a Greek exit is not the preferred route, even though it would " manageable". It does not look very encouraging.
Technically it is all the same as yesterday.
We continue to fail to make any sustained progress above the 1.2363 level (61.8% of 1.2442/1.2240) although we did make it to 1.2368 briefly today.. The oscillators are all completely flat and it could be a pretty quiet Tuesday session. Right now we need the Euro to get above 1.2363 and 1.2385, last week's high, in order to test the sellers above 1.2400 and then 1.2442, the high following Draghi’s comments on 7 August . Above this sees 1.2472 (61.8% of 1.2742/1.2042) followed by the neckline resistance, currently at 1.2545, and then 1.2574 (76.4%). I am not sure that the Euro has the legs to get to these lofty levels unless there is an unexpected positive move from the EU. Unlikely.
On the downside, the short term channel base is now at 1.2287. It does not look in any danger for the time being although any negative political comment could quickly change that, and a break would see a test of minor support at 1.2215 and 1.2190.
More important support would then be found at the 2 August low of 1.2133 below which would suggest a retest of the 24 July, 1.2042 low.
I would be looking elsewhere for inspiration today as it may not be until the FOMC minutes on Wednesday (Thur morning, Asia), before we see any real action. For today, as with yesterday, use 1.2280/1.2380 as a guide.
