EUR/USD: 1.3320It was not a session for the faint hearted overnight with the Euro initially squeezing higher to 1.3371 before collapsing to 1.3266 on unfounded rumours of the ECBs Weidmann's resignation and a press report that the German banks are to be forced to split their retail and investment banking divisions.
The Euro then took off in a major hurry back to 1.3350 area on the release of the much stronger than expected German ZEW survey. This came in at +31, against expectations of +12 and followed December's reading of 6.9. It was the highest reading in almost 3 years and was given added impetus from a ZEW economist who suggested that the Bundesbank may revise upwards the German economic growth outlook for 2013. All pretty Euro positive, but it was unable to carry on and has spent the rest of the session sliding back towards 1.3300 and thus remains within the recent range but continues to hold above last week's 1.3255 lows.
Elsewhere today, the main highlight in the EU was the agreement to release the next tranche of the Greek bailout funds bailout fund of EUR 9.2bio at the EU Eco Finmin meeting in Brussels.
So technically nothing has changed, and 1.3255 – last week’s low – remains the initial support ahead of 1.3248 (38.2% of 1.2997/1.3402). Below this would see a deeper setback towards 1.3200 (50%) and then 1.3150 (61.8%). The major trendline support, as seen by the ascending white line is now at 1.3032, which for now, looks pretty safe.
Although it currently looks unlikely, with the hourly indicators being flat, a return to the topside, above last week's high would possibly accelerate towards 1.3485 (50% of 1.4939/1.2041) and possibly to 1.3547 (2 Dec 11 high).
The 4 hour and the daily charts are not giving any hint of anything directional and so for the coming session look for more choppy 1.32/1.33 rangebound trade, with little data out today, and most likely to be influenced by the EU Consumer confidence figures.
Economic data highlights will include:
German 30 Yr Bond Auction, EU Consumer Confidence.
