EUR/USD: 1.2525The Euro had a another pretty quiet session until the FOMC minutes hinted that the Fed are likely to change their tune and look set to ease policy unless there is a major change in the economic data. At that point the Euro took off and is currently just shy of the day's high of 1.2537.
We now await Bernanke on the 31st August at Jackson Hole, at which point the picture will become much clearer. Certainly, the pressure will now be on him to come up with the goods regarding QE3 and if he does not, then the reaction will be rather ugly.
Earlier in the day, the Greek PM, Samaras has been meeting the chairman of the Eurogroup, Jean Claude Juncker, who declared that he was totally against a Greek exit from the EU, but suggested that the ball is in Greece's court and that it was on its last chance to implement the austerity measures. For his part, Samaras said that Greece was totally committed to making the required Eur 11.5 bio of cuts that are required, but needs time to do so. The decision on whether Greece will receive further funds will ultimately come from the Troika, who will meet again in September. Angela Merkel poured some water on the whole thing when she reiterated that there will be no easing of the rules that Greece needs to abide by in order to stay in the EU, and which sent the DAX lower, to close down 1.00%
The Euro is heading towards the top of the channel(1.2560), which just about coincides with the Fibo resistance at 1.2574 (76.4% of 1.2742/1.2042). The momentum continues to point to the higher ground, but the 4 hour charts are becoming pretty overbought and I would be doubtful of seeing much progress beyond here for the time being. Above this is the 100 DMA at 1.2622, but which I suspect is safe for now.
Having said that, the downside will remain pretty well bid as the shorts scramble for cover. Support will now be seen on dips to 1.2480 and then at 1.2455, below which would see a return to the Fibo levels at around 1.2390, but which looks unlikely right now. The channel base is now at 1.2315.
We now have the continuation of meetings between Samaras, Juncker, Merkel and Hollande over the next couple of days, and direction will largely be taken from the sound-bites emanating from there and from the upcoming data.
Today is a busy one economically. We get the German GDP, EU Consumer Confidence and all the EU Manufacturing PMI data numbers. Later on comes the US Jobless Claims, New Home Sales and the US PMI.
It could be quite confused, but for now I would be looking to 1.2480/1.2580 to cover it.
