EUR/USD: 1.2715Although the Chinese data on Friday assisted risk assets and gave the Euro a mild boost, that was as good as it got on the upside, running into decent sellers, turning lower in European trade and finishing the week on a soft note after comments from the German Economics Ministry that growth will slow considerably in coming months. This was backed up by French data showing that Industrial Production shrank by 2.7% in September, a fair bit more than the 1% that had been expected.
Greece also remains well in focus, with comments on Friday that EU ministers are unlikely to sign off on the next tranche of aid for Greece at a meeting on Monday, and that any handover of the bailout funds could be delayed until they have received the report from the Troika, probably on Nov 26. So, all eyes will look towards the Troika now, with the usual goings-on in Spain and Cyprus being closely monitored.
Over in the US on Friday, Barack Obama reiterated his plans to avoid the fiscal cliff, although nothing much seems like changing on that subject with the standoff between the Republicans and the Democrats looking as though it will drag into next year.
From a technical perspective, further mild downside pressure appears as though it could be the name of the game this week with the daily MACD's pointing lower although both the RSIs and Stochastics are oversold, so further progress is likely to be slow. We reached the initial 1.2695 support on Friday (low 1.2689) and if the Euro succeeds in pushing on beyond there, then there is not too much to hold the Euro up before the 100 DMA at 1.2634 and then at around 1.2607 (50% of 1.2042/1.3171). Below this would suggest deeper declines to wards 1.2475 but we will deal with that if/when it comes into view.
While the dailies are pointing lower and we are drifting slowly down, the 4 hour charts are showing increasing bullish divergence and I would therefore be wary of bounces, but which, if seen, should provide good selling opportunities for the greater downtrend. A short squeeze could take us back up to 1.2790 minor trendline resistance and possibly onto 1.2860 (38.2% of 1.3171/). Beyond there looks unlikely, but the greater trendline resistance is now at 1.2930.
Monday is a partial European Holiday (Armistice Day) and a US Holiday (Veterans Day) and so it could be a quiet start to the week.
The Economic highlights this week will be:
M: France, US Holidays.
T: Eco Fin Min Meeting, ZEW Survey,
W: EU IP, US FOMC Minutes, Retail Sales, PPI, Business Inventories, Bernanke speech
T: EU GDP, ECB Monthly Report, CPI, GDP, US CPI, Jobless Claims
F: EU C/A, Trade Balance, Industrial Production, Capacity Utilization.
