EUR/USD: 1.3075The Euro, having been buoyed over the previous session by the optimism that Greece will receive increased funding through the debt swap deal, was sent in the other direction today following a disappointing Spanish bond auction that did not reach full target, selling EUR 1.1b 10 year bond dropped to 5.29%.
Elsewhere today, data was weak with EU retail sales falling by 1.2% m/m in October against expectation of -0.2%.
In the US, ahead of Fridays NFP data, the ADP private sector jobs report was lower than the expected 118k (exp 125k) ensuring that the dollar remained under some pressure of its own and overall keeping the Eur/Usd in a reasonably tight range.
The Fiscal Cliff headlines are keeping the markets on edge, with Bloomberg reporting that 40 Republicans called for a break the budget impasse, and Obama suggesting that a deal could be done within a week. That appears to look fairly optimistic, with little progress being reported on any positive outcome.
From a technical perspective, the Euro ran out of steam at 1.3126, thus falling short of the resistance at 1.3139 (17 Oct high) and retreated to the day's low of 1.3060, before a mild recovery to currently sit in the middle of the day's range.
The 4 hour charts continue to suggest that the Euro is going to struggle on the upside, with today's ECB meeting expected to keep rates on hold, but with Mr Draghi likely to be fairly gloomy about the state of the European economy at the press conference.
The immediate resistance will be at 1.3100 and then the days 1.3126 high, but if the Euro does find new legs and does keep climbing higher, above 1.3139 would see a move towards 1.3171 (17 Sept high) and then to 1.3200 and above, where it all comes a bit congested. Upside progress, if seen, looks likely to be slow.
1.3060 is now minor support below which 1.3020 (23.6% of 1.2660/1.3106) and then 1.2948 (38.2 %), will see bids but looks unlikely today unless the ECB spring a surprise.
All up, I suspect we are not going too far in either direction, but the charts are beginning to look as though rallies towards the session highs may be selling opportunities, with stops probably placed somewhere above 1.3140. A move back towards 1.3000 and maybe a bit below appears possible from the short term charts, but overall I would imagine that the market is going to be rather slow until the NFP data.
Economic data highlights will include:
EU GDP, German Factory Orders, ECB IR Decision/Press Conference.
