EUR/USD: 1.2930Despite the Greek debt deal being passed, the Euro met good sellers above 1.3000 and has since retreated a little as the market focus turns to see whether Athens can now follow through and implement the necessary reforms to keep the bailout funds flowing. I would think that there is about no chance and that we will still be looking at going around for another bailout it about 12 months time, despite Angela Merkel promising that Germans will not be providing any further assistance. How any nation can reduce debt from the expected 190% of GDP next year to 124% in 2020, while in recession is way beyond my understanding of economics, so it will be an interesting lesson!
In the US the data also provided a bit of a boost for the dollar, with Consumer Confidence data coming in higher than expected, and placing the Euro under a bit pressure.
Elsewhere, the OECD has a pretty grim outlook for global growth next year and cut its forecasts to 1.4%, citing Europe of particular concern, which it reported, looks likely to remain in recession, with very mild growth in the US (if the fiscal cliff can be avoided) and which did little to assist the Euro.
Technically then, the Euro remains within the 1.29/1.30 range and there is little new to report, although candlestick traders are getting excited by today's bearish engulfing candle which may herald the beginning of a new downtrend. Time will tell.
1.3000/1.3025 remains the initial area to overcome and does not look really look like doing so in the next 24 hours. The 4 hour charts, which yesterday were overbought, have now turned lower as the Euro dropped to its session low of 1.2915. This now becomes the first minor support, a break of which would see a move to 1.2900 and then 1.2875 (38.2 % of 1.2660/1.3008), 1.2835 (50%) and 1.2795 (61.8%).
The topside will remain difficult ahead of 1.30/1.3025, although a break would target 1.3083 (22 Oct high) and the 17 Oct high at 1.3189.
I would not be getting too excited about any major move either way today and it could be that we are round about here this time tomorrow. Use 1.2900/1.3000 as a guide with a mild bias to the downside to test 1.2875, but which, if seen would probably provide a buying opportunity for a return to test 1.3000 later in the week. There is little data out today to provide too much inspiration and I suspect it could be a quiet one.
Economic data highlights will include:
W: German Consumer Price Index, US Beige Book.
