EUR/USD: 1.3020 The Euro remained firm today, reaching a 2 week high, after the EB left rates unchanged and Mario Draghi stated that the ECB is ready to commence its bond buying programme in order to lower the borrowing costs of the debt ridden countries within the EU such as Spain and Italy.
Spain held a bond auction today and sold EUR 3.992b in Oct 2014, Oct '15 and July '17 bonds, close to EUR 4b maximum target. Yield on the 2014 bond was at 3.282%, sharply lower from 5.204% at prior auction in July.
We now await the US Unemployment/NFP data later in the session (expect +0.1% @ 8.2% and +113K) and with the Columbus Day US holiday in the US on Monday it could be rather volatile as pre-weekend book squaring takes place.
The Euro has drifted steadily higher throughout the session and sits near the highs of 1.3030, exactly 61.8% of 1.3171/1.2802. This should provide a bit of a cap, possibly until we see the data later on, and Asia looks likely to have a quiet 1.3000/30 range, although the Euro may be pushed around a little by flows in Eur/Jpy if the BOJ spring a surprise at their meeting later today, where no change in rates is expected.
A continuation higher, - and the 4 hour charts are building some positive momentum - , would see a continuation towards 1.3083 (61.8% of 1.3171/1.2802). Beyond there lies major resistance at 1.3145 where there is both Fibo (38.2% of 1.4938/1.2042) and major descending trendline resistance. Above this lies the recent 1.3171 high (17 Sept) .
The downside would see bids back below 1.3000, commencing at 1.2960 (minor) and then at 1.2900. Below here would suggest that we head back to last week's 1.2802 low and then onto Fibo support (38.2% of 1.2042/1.3171) at 1.2740, which currently looks unlikely to be seen.
The shorter term charts are a little overbought and so the upside should probably remain capped through Asia, while they unwind. Although the 4 hours charts are positive, the dailies are not so sure and all up, over the next few days I suspect we may have some more choppy, directionless trade, largely confined to a 1.28/1.315 range.
