EUR/USD: It has been a pretty uninspiring session for the Euro, unable to gain any ground above Fridays high and it has traded within a 50 point range. Only the strong US Durable Goods Orders provided any directional move, as traders bought a few dollars on the release of the data that showed a rise of 4.6% for December against the expected 1.9%. Reports in the press confirm that capital is flowing strongly back into the Euro, as can be seen from the recent action in most of the Euro crosses. This looks likely to continue and in the medium term the downside for the Euro is beginning to look a little limited, although a stronger Euro will not do EU exports any favours.
Technically nothing has really changed today, and as long as we remain above the previous range top at 1.3400 the medium term picture remains mildly positive for further gains. The next upside target is at 1.3485 (50% of 1.4939/1.2041) and if/when we get there, the subsequent attraction will be 1.3500 and then 1.3547 (2 Dec 11 high). It all gets a bit congested beyond there and I would not be looking for too much for the time being, although the indicators are generally supportive of further medium term gains and dips looks as though they will provide decent buying opportunities.
If we do see setbacks, below today's 1.3424 low, the first level to watch will be the previous resistance at 1.3400, below which could see a drop to 1.3320. The recent base at 1.3255 looks pretty safe right now, but would provide good support.
As I said,the longer term charts are quite supportive of the Euro and although the dailies are yet to turn convincingly higher, I suspect that in the weeks to come we are going to trade above 1.3500, taking out the Fibo pivot at 1.3485, for a slow grind higher, although the next major Fibo target will not seen until 1.3820 (61.8% of 1.4939/1.2041).
Today sees bits and pieces of data, but the major events come tomorrow (US GDP, FOMC) and then on Friday (NFP). Until then I suspect we could be in for another session within 1.3400/1.3500
Economic data highlights today will include:
German Consumer Confidence, US Consumer Confidence, Case/Schiller Home Price index
