EUR/USD: 1.2970The Euro is a bit lower today - after having traded up to 1.3013 -, when John Boehner, the speaker of the U.S. House of Representatives turned his positive comments in the previous session, right around and suggested that no real progress had been made over the last two weeks, to come to any agreement in discussions to avoid the fiscal cliff.
Earlier in the day, the Euro was assisted by better than expected Consumer Confidence data, as well as a solid Italy auction result where EUR 3bio of 10 year bonds fetched 4.45%, the lowest level in two years. Across the Atlantic, the US Q3 GDP was revised up to 2.7% qq, against expectation of 2.8% qq from 2.0% at the previous reading.
There is a fair bit of important data out later today which could provide some interim volatility, (EU Unemployment, US CPI) but in the bigger picture, it will be the political discussions that provide the direction. Also to watch out for is the German Bundestag vote on the release of the bailout funds for Greece. This will be a formality, but in the EU, it doesn't pay to expect the expected, so stay nimble!
So technically, having looked bid all day the Euro fell sharply to session lows of 1.2938 once the Boehner comments hit the wires and now sits pretty much in the middle. The early positive vibes took it up to perfectly hit the long term trend resistance (chart), failing just ahead of the Fibo resistance which currently remains intact at 1.3024. As we have said in previous days, this may well hold, but if not, the next upside target would be 1.3083 (22 Oct high) and the 17 Oct high at 1.3189.
Support levels are now at today's low of 1.2938, below which lies 1.2900 (minor) and then 1.2875 (38.2 % of 1.2660/1.3008), 1.2835 (50%) and 1.2795 (61.8%).
It looks as though the markets are going to be increasingly jumpy and will derive direction from the political speak, both from Europe, with regards to the never ending debt problems, and increasingly from the US, at least until the conclusion of the budget negotiations or until Jan 1, when time will have run out.
Once again today, I suspect that 1.2900/1.3000 will largely cover it and the indicators are mixed and offering no real hints either way, although in the longer term, the dailies do remain mildly positive for the Euro. Nearer home, the short term hourly charts are pointing lower, while the 4 hourlies are pretty much undecided. The picture therefore looks rather neutral today, and flexibility is required, so I would imaging another day of range trading with the best plan being the continuation of buying dips below 1.2900 to 1.2875 and at the same time selling rallies above 1.3000 with a stop above 1.3025. Suitable stops should be place on either side in case we do see a continuation one way or the other.
Today sees
German Retail Sales, Bundestag vote on Greek aid, EU Unemployment, CPI, US Personal Consumption Expenditure
