EUR/USD: 1.3575Having traded heavily through the Asian session, the Euro turned around in early Europe after some good buying interest from the Middle East, helped along by the EU Services/Composite PMI data that generally showed some improvement, ahead of tomorrow's ECB meeting at which policy is expected to remain unchanged.
That being the case, all will depend on the outcome of the Press Conference that will follow the meeting. The Euro will take its direction from whether Mr Draghi remains optimistic on his outlook, as he did last month or whether he sees some storm clouds ahead and perhaps suggests that the Euro has risen too quickly, thus having a negative outlook for exports and continued economic growth.
Today saw the Euro reach as low as 1.3457 before turning around sharply and it has since traded up to 1.3596. The economic woes of Italy and Spain were less in focus today, allowing the equity markets and therefore risk sentiment to recover (DAX +0.35%, Italy +1.1%, Spain +1.6%, S+P+1.16%)
With little economic data out today, the market looks likely to hover not too far from current levels ahead of tomorrow's meeting. There is little point in attempting to look into what Mr Draghi might come up with, and simply from a chart perspective, they are pretty mixed. While the hourlies point higher, suggesting that 1.3550/1.3600 should cover it for the next few hours, the 4 hour charts are pointing lower but have unwound their overbought conditions and could easily turn around. The dailies are still mildly positive and have some upside potential, although they are in danger of becoming overbought. All up - pretty mixed.
It is difficult to have any sound view, but out of choice I would tend to think that today will do comparatively little but that the Euro may continue to head a bit higher over the next few days for an eventual retest of 1.3710. The strength of the bounce of today's lows does not suggest that the market is all that long and that the market was scrambling for cover.
For today look for another range bound session within 1.3500/1.3620 ahead of the main action coming tomorrow. Decent offers currently sit in the 1.3600/40 area.
Economic data highlights will include:
German Retail Sales
