EUR/USD: 1.2900 EUR/USD got off to a choppy start to the week in early, thin conditions and after opening at 1.2945, took out some stops up to 1.2972, before heading back lower again by the time that Europe got in, to test Friday's lows, under 1.2900.
In the absence of any New Market it has done very little since then, and with the storm likely to keep NY closed again tomorrow it looks as though we can expect more of the same.
The Euro has remained on the heavy side as equity markets slid lower going into the close after the Spanish PM indicated that Spain does not need a bailout, despite the release today of Spain's retail sales data which showed a huge y.o.y. drop of 10.9%. Mr Rajoy has today been meeting with his Italian counterpart, PM Monti to discuss the debt situation, where there is a growing divide between the two nations and Mr Monti has been urging Spain to ask for a bailout in order to bring down borrowing costs across Europe.
So the Euro has found it hard to stage any rally today but remains firmly within its recent range.
On the downside, it continues to see good bids in the 1.2880/90 range, below which, are stops that could take the Euro down to the 200DMA at 1.2832. This has held firm on previous attempts, and above the 1st Oct low at 1.2802 and thus this area should prove to be strong at the first crack at it. A break would suggest further declines towards 1.2740/10 area, but I don't see this yet.
The topside will see sellers at today's top at around 1.2970 and then at 1.3000. Back above here would head towards the recent highs at 1.3022 and then at 1.3074 with the long term descending trendline now at 1.3090, which should prove strong. An unlikely break would see the 17 Oct, 1.3140 high, which is also 38.2% of 1.4939/1.2042.
Daily momentum indicators are still pointing lower, although the 4 hourlies are not indicating anything significant for the coming session and with NY looking likely to be closed again, it could be that we are in for another sideways/heavy drift for the Euro.
Today sees a fair bit of data, including a bit out of the US but whether the Consumer Confidence or Case Schiller is released remains to be seen. Before then we get German Employment and EU Consumer Confidence. Mario Draghi will also be speaking and looks likely to be the source of any volatility in the markets for the coming session.
Look for 1.2830/1.2930 to cover it.
