EUR/USD: 1.2595With the US out for the Labor Day holiday, the Euro has traded quietly but has retained a bid tone in anticipation of some upcoming central bank stimulus, commencing with the ECB meeting on Thursday, when it is hoped that Mario Draghi will announce an asset purchase programme to buy short term bonds of Italy and Spain in order to reduce their borrowing costs.
Keeping a cap on the Euro though, was firstly the soft manufacturing PMI data where the EU zone came in at 45.1 against an expected 45.3, while Germany recorded 44.7, against the flash 45.1. On top of this, the Spanish region of Andalusia today became the 4th Spanish region to go to Madrid to ask for a handout - this time for Eur 1 bio. The Spanish PMI was actually slightly better than expected, coming in at 44.00 against an expected 42.6.
Looking ahead, we now have August and the holiday season behind us and can look forward to a pretty hectic September, starting with the EU PPI and then the US ISM Mfg PMI and Construction Spending later on today. We then have the ECB meeting on Thursday, which will be followed by the equally important German constitutional court ruling on the legality of the ESM on September 12. Before then of course we get the US Non Farm Payrolls on Friday, so it is going to be a very busy couple of weeks
Technically little has changed. Short term report is now to be seen at 1.2530 and then at 1.2460 (23.6% of 1.2042/1.2589). Below this 1.2400 (50% pivot of 1.2742/1.2042) comes into play but looks like being untouched today.
On the topside, sellers will be seen as we approach the session high at 1.2610. Greater resistance lies at Fridays high and channel resistance at 1.2640, ahead of Fibo resistance at 1.2720 (23.6% of 1.4935/1.2042).
It looks like being a bit choppy today and will no doubt be driven by the US data later in the day. Until then, expect 1.2560/1.2640 to cover it, with the 4 hour charts building mildly positive momentum, but likely to run into good sellers at 1.2640 - if seen.
