EUR/USD: 1.2880Risk associated markets continued lower today after the IMF statement that it sees an 'alarmingly high' risk of a fresh global slump in economic growth. This came on top of the already uncertain outlook for Spain and Greece, where today there were mass protests in Athens to greet Angela Merkel, who was meeting the Greek PM Samaras. She told the Greek people that although they are making progress, much needs to be done, and she showed no sign of easing up on the terms of the bailout.
On the same subject, ECB head, Mario Draghi said in Brussels that while Greece has made progress on reforming its economy, it has more work to do. Speaking before the European Parliament, he noted that for Greece the "road is still long and it is uphill" and was generally cautious on the EU economy but noted that downside risks remain. This did little to help the Euro and it remained under pressure all day.
Technically, the Euro currently looks heavy, trading towards session lows (1.2858) and appears headed towards last week's lows at 1.2802. Support here should be strong, but a break would suggest further declines to (38.2% of 1.2042/1.3171) at 1.2740, where the rising trendline currently intersects it. With both the 4 hourly and the daily charts picking up downside momentum, it would seem that this is the path of least resistance, although the hourlies are now becoming oversold and so care is needed in case of a bounce. 1.2740 should prove very strong at the first attempt, but a break would suggest a steeper decline to the low 1.2600 level where 1.2610/40 area would act as a target.
The upside for the Euro looks to be a bit more problematic at the moment and sellers will now be seen at 1.2907 (23.6% of 1.3171/1.2858). Above here further Fibo levels to watch would be at 1.2938 (38.2%) and 1.2988 (61.8%), ahead of 1.3000, which looks unlikely to come under pressure today.
Further out, resistance remains at 1.3083 (61.8% of 1.3171/1.2802) and beyond this, the major resistance is at 1.3145 (38.2% of 1.4938/1.2042).
Today, at the NY close of the Stock Market we get the first of the Q3 corporate profit reports from Alcoa which may provide some volatility as a precursor as to what we might expect over the next couple of weeks as the major US companies release their profit reports. Analysts expectations are for the weakest reporting quarter since 2009.
Later on in the session, EU data is a bit thin on the ground, but the US session will see the release of the Beige book, into the current state of the US economy and will therefore be closely watched.
German 30 year, US 10 year auctions.
For today, use 1.2800/1.2900 as a rough guide.
Alcoa just kicked off the US reporting season with a Q3 loss of 13c/share, but topped analysts expectations and its shares have risen 1.5% in after hours trade. - S+P Futures -unchanged.
