EUR/USD: 1.2705The Euro, despite making yet another 2 month low today at 1.2660 , is doing very little and is currently still at levels seen at last week's close and it is beginning to look ominously as if the Christmas doldrums have come about 5 weeks too early!
Today saw the euro drift to its low after the euro zone and the IMF failed to agree on a long-term plan to reduce Greece's debt, preventing disbursement of any immediate aid to Athens but Greece today managed to sell Eur 4.1 bio of short term debt, to raise sufficient funds to cover its immediate needs and to avoid going into default, before any deal on the bailout is agreed on. The Greek Finance Minister has ensured that the market remains focused, by telling the parliament that Greece is not far away from a default if it is unable to refinance its debt, and which will ensure continued nervousness and will prevent the Euro from going too far north in the next couple of sessions.
The Euro was not helped today by a greater than expected drop in the EU and the German ZEW economic sentiment survey, and from the statement that, at best, the economy will perform in a "sideways to negative" manner over the next 6 months.
The only bright note that the market was able to catch hold of was the report a German newspaper said Germany wants to bundle Greek aid into a single payment of more than Euros 44 billion which traders took as a sign that Germany was keen to see the bailout actually get paid out. - Sounds like clutching at straws to me!
There is no real change in the charts today, although there is now some support at the 1.2660 session low. A retest and break of this would head towards the 100 DMA, now at 1.2637, with the next support at around 1.2607 (50% of 1.2042/1.3171). Below this would suggest deeper declines to wards 1.2475, but at the current rate of progress could take weeks!
The dailies are still pointing lower, although the stochastics and RSIs are getting into oversold territory and further downside progress will remain slow. The 4 hour charts continue to show some bullish divergence so I remain wary of bounces, but which, if seen, should see plenty of supply, within the greater downtrend. Sellers are still reportedly lined up in the 1.2740/60 area, although above here a short squeeze could take us back up to 1.2770 (23.6% of 1.3171/1.2660) and possibly onto 1.2838 (38.2% of 1.3171/1.2660). Beyond there looks unlikely right now, but the greater trendline resistance is now at 1.2907.
Today sees EU Industrial Production and US retail Sales with the highlight being the FOMC minutes. Until then it looks to be another very boring session.
