EUR/USD: 1.3045The Euro has continued its consolidation today, drifting a little lower, despite a better than expected ZEW economic sentiment survey from Germany.
The market appears to be largely on hold now, waiting to see whether Spain finally asks for a full sovereign bailout following last week's announcement of a bond buying programme by the ECB. The ECB will not come riding to the rescue until Spain makes an official request. Spanish 10 year bonds continue to hover at around 6% and will not have much choice in going to the EU if they continue to rise, although today saw a short term auction with slightly improved yields, where sales of Eur 3.5b 12-month bills fetched an average yield at 2.84%, against 3.07% at the August auction.
Elsewhere today, it was fairly quiet, with few market moving headlines and with little economic news to interest the market, traders continued to draw breath following last week strong move to sell the dollar.
Technically, little has really changed for the Euro as it currently sits just above the rising trendline support at 1.3025 although it does currently look rather heavy. A break would suggest a decline towards the first Fibo support line at 1.2908 (23.6% of 1.2042/1.3171) and the way the 4 hour indicators are looking this seems quite possible. They continue to unwind from last week's run-up but are pointing quite steeply lower, so the upside seems somewhat limited to me, with keen sellers looking to appear on rallies towards 1.3100. If wrong here, further rallies would take us back to the weeks 1.3170 high, ahead of major 1.3205 trendline resistance.
The dailies are still pointing higher, although may be in the very early stages of rolling over. Thus I suspect the consolidation may well continue, albeit with a slightly lower bias and for the coming session I would imagine 1.2980/1.3080 should cover it, with interim buyers likely to be seen at the psychological level of 1.3000.
