EUR/USD: 1.2940Friday's session was a pretty quiet affair, although the euro did manage to trigger stops beneath 1.2900, reaching a weekly low of 1.2882, before recovering to levels where it had sat for much of the session, through Asia and early Europe.
The markets remains very much rangebound and in a neutral stance, capped on the topside by concerns over Greece's ability to secure another loan from its creditors, but with traders reluctant to sell the Euro too aggressively incase Spain finally ask for a bailout. With Spanish unemployment now at new highs, above 25%, that surely cannot be too far away.
The dollar has question marks of its own, with the US election now very much in focus, and with the Obama camp getting a bit of a boost on Friday, following data that saw the US GDP grow at a stronger than expected 2.0%.
The US also faces difficulties though, with the possibility of the looming "fiscal cliff", where, unless Congress agree on a debt and deficit reduction deal by the end of the year, tax increases and spending cuts will be introduced.
The week ahead will be a busy one, with Unemployment and PMI data from both the EU and the US; the highlight being Friday's NFP data, where expectations are for a rise of 115K.
It is also month end and the dollar is likely to receive an underlying bid tone from corporate demand on Monday.
Technically there is very little to add from the previous week. On the downside, although we have taken out the bids to 1.2900 and below, briefly breaking the 4 month rising trendline, I suspect that 1.2890/00 will continue to provide support early in the week. A break would take us to the 200DMA, now at 1.2832, which has held pretty well on previous attempts, above the 1st Oct low at 1.2802, which early in the week looks a little unlikely, although further out seems quite possible.
The topside will see sellers at 1.3000, and back above here, towards the recent session highs at 1.3022 and then at 1.3074. The long term descending trendline now lies at 1.3098 and should prove strong, but a break would see the 17 Oct, 1.3140 high, which is also 38.2% of 1.4939/1.2042. Above this would see a return towards the 17 Sept 1.3171 high and then to 1.3266,1.3368 and 1.3480, all of which acted as tops between February and April, although it looks unlikely that they will come under pressure this week.
In the longer term, the daily charts still look under a bit of pressure for an eventual move towards 1.2800, although the weeklies are now completely flat, which suggests more choppy sideways trade lies ahead.
Unfortunately, moving into Christmas, it looks to me as though we are in for more of the same, and as long as Spain holds off from asking for assistance from the EU, their bond yields will slowly rise back towards 6% and the Euro will stay under mild downside pressure, with the market likely to be wary of selling it aggressively, just in case the politicians actually do make a positive decision, sending the Euro higher..
For Monday, with the 4 hour charts looking mildly positive it may that the early direction is for the Euro to drift a little higher, but ultimately going nowhere too far and 1.2900/1.3000 could well cover it again, with the pressure looking likely to return to the downside as the week progresses.
Economic Highlights this week will include:
M: German CPI, US Personal Consumption
T: German Retail Sales, Unemployment, Mario Draghi Speech, EU Consumer Confidence, US Consumer Confidence, Case Schiller House Price Index
W: EU CPI, Unemployment, Eco Fin Meeting,
T: US ISM Mfg PMI
F: EU Mfg PMI's US Unemployment/NFP, Factory Orders.
