EUR/USD: 1.3065The Euro had done very little today, before a late NY afternoon sell-off to the days 1.3055 lows, but before then, mostly sitting in limbo at similar levels to yesterday, as the EU summit in Brussels gets under way. There is nothing yet to report from there, and no real decisions are expected to be made, with much of the talk being on the subject of closer fiscal/banking integration within the EU.
The Euro has spent much of the day drifting around, although it is currently looking heavy and under pressure late in the NY session. Equity markets in Europe have mostly moved higher again (Dax +0.6%, EStoxx50 +0.17%), in anticipation of a Spanish bailout to be announced in the next few weeks, and Spanish 10 year yields have dropped back below 5.5% (5.36%) for the first time in 9 months. It was not all good news though as a general strike in Greece has turned violent with litte positive news coming from Athens. The market seemed to have more interest in Google, whose shares were mistakenly released early, missing profit estimates and saw the shares fall by 9%, before the stock was suspended, although the S+P has not been too badly shaken, closing down 0.25%.
Technically we have spent much of the day within a 50 point range although the late NY selloff has seen us test the 1.3065 support (low 1.3055), which is currently just about holding. A sustained break below 1.3065 (23.6% of 1.2824/1.3139) would suggest declines to the further Fibo supports from the recent run higher from 1.2825, at 1.3020 (38.2%), and 1.2982 (50%).
Back above 1.3100, 1.3140 is where the major resistance lies (this being the major downtrend resistance commencing from 1.4939, 4 May ’11), which for the time being will be a difficult hurdle to overcome. Above 1.3140 would see a quick move to 1.3171 (17 Sept high) but looks doubtful in the coming session unless there is some major positive news from the EU which is highly unlikely . Beyond there, it looks as though the Euro would make an approach on 1.3283 (1 May high) 1.3346 (27 Mar high) and then possibly towards 1.3479 (27 Feb high), and which is also the next major Fibo point (50% pivot of 1.4939/1.2042).
It now looks like a session of sitting on hands waiting for any potential announcement from the EU, while data today will include the German PPI and the EU Current Account. Use 1.3050/1.3090 as an immediate guide, with a mild bias lower going into the weekend . The 4 hourlies are rolling over and I suspect that with little likely to come from the EU summit, we may see a mild drift lower at some stage later in the day as longs square up.
