Euro: 1.2950The Euro remained fairly close to the weekend closing levels after an early selloff in Asia was reversed on a Reuter’s story that Spain may go to the EU for a bailout next month. Any real upside momentum though, was limited due to the ongoing uncertainty of the situation in Madrid and the market is prepared to sit and wait, which probably means further trade at around current levels in the sessions to come.
George Soros weighed in today, calling the EU crisis a “self created nightmare”. This would not have helped the positive momentum in the Euro and the session was capped at 1.2890 in a day that was otherwise relatively free of fresh news, and looks likely to see it trade around here until the EC meeting begins on Thursday.
We did get some positive news with reports that the next tranche of the Greek bailout package should be available in November, although the Greek press reported that negotiations will go down to the wire.
September US retail sales beat forecasts (1.1% vs. exp 0.8%) and Augusts’ numbers were revised up which helped to keep a bit of a cap on the Euro and provided some support for the dollar.
Technically, little has changed. Today’s 1.2890 low should provide a bit of a base. More importantly, the Euro remains above the 200 DMA (currently 1.2832) and this remains the initial solid support above the longer term rising trendline from the 1.2042 low, now at 1.2818, and above the recent 1.2802 low. 1.2800/30 should therefore be pretty solid at the first attempt, if we get there. A break would suggest further declines to 1.2740 (38.2% of 1.2042/1.3171), which, if seen should also prove very strong at the first attempt, but a below here would suggest a steeper decline to the low 1.26 level where 1.2610/40 area would act as a base.
The upside has seen the Euro unable, so far, to reach Fridays high of 1.2991 and this will remain a short term hurdle ahead of 1.3000 where good offers are said to lie, but above which stops are said to exist, ahead of good sellers supposedly lined up in the 1.3040 area. Above this would see a return towards the recent 1.3071 high and then to the major long term down trend resistance at 1.3140, which is also 38.2% of 1.4939/1.2042 and should prove very strong.
The shorter term indicators are all pretty flat so I don't think we should get too excited about any major move in the coming session. The dailies are pointing lower still, allowing them to continue to unwind their previous overbought condition. I don’t think it means too much today and suspect that 1.2900/1.3000 may again cover it, although we do get a fair bit of data later on today that may provide some choppy volatility.
Today sees: EU CPI, Trade Balance, ZEW Survey, US CPI, Long Term TIC Flows, IP, Capacity Utilization.
