EUR/USD: 1.2780More bad news from Spain and Greece kept the pressure on the Euro today and once Europe got in, the support at 1.2800 got taken out, with little recovery as it continues to trade just above its session lows.
In Spain, October saw unemployment rise by 2.7%, to 4.8 million pushing bond yields higher to 5.8%, while in Greece, the parliament is due to vote on Wednesday on the latest austerity package, needed to secure international aid and it is being reported that the Eur 13.5 bio in cuts is looking unlikely to be passed.
All this kept the pressure on the downside as the market waits on the major event of the day, - the US election - which the bookies have Obama as pretty firm favourite to win although the 'experts' all say it is too close to call. We shall have to wait and see on that, but the market is now unlikely to do too much either way until we begin to see some results in around 36 hours time.
Technically, the Euro has done pretty much was we expected, initially holding on above 1.2800, before taking out the stops below there later in the session, but so far holding on to the support at around 1.2740/50.
The Euro though is closing below the 200 DMA, now at 1.2825 and the indicators are pointing to further declines in days to come. Bids will be seen at around 1.2745 (18 June high at 1.2747) and Fibo support at 1.2741 (38.2% of 12042/1.3171), below which lies 1.2692, the 29 June high.
The topside should now be contained at the 200 DMA at 1.2825 and then at 1.2853 (23.6% of 1.3139/1.2767) which looks a bit unlikely to be seen for the time being, although the hourly charts are oversold and showing the possibility of some mild bullish divergence. Thus for the coming session, while the longer term indicators are suggesting further falls, I suspect a pullback towards 1.2800 may be in order to allow them to unwind, before we can head lower.
As I said yesterday, until the US election result is known, don’t get too excited either way.
Aside from the election, today's data will include EU Services PMI’s, EU PPI, and German Factory Orders.
