EUR/USD: 1.3400The Euro took a swallow dive after Mr Draghi said that the Euro exchange rate was an important factor for economic growth and price stability, and will be monitored closely. He added that while he can see some economic growth over the course of 2013, there are still downside risks from a stronger Euro and that was good enough for the market to perceive the ECB's concern in the recent strength, and it fell a quick 200 points to a low of 1.3369 before a bit of a bounce back towards 1.3400.
From here the short term picture is a bit cloudy and the outlook for today is pretty neutral.
While 1.3360 (76.4% of 1.3250/1.37100) holds and the hourly charts remain oversold, this should provide a bit of a base. Below there though, would take us back into the sideways consolidation seen through mid January between 1.3250 and 1.3400. The 4 hour charts are pointing in this direction and the downside may come under a bit of pressure early next week. If we do go under 1.3360 today, I suspect 1.3300 should hold it through the current session.
Given the slightly improved sentiment in Europe recently, and the fact that Mr Draghi does see some mild growth in the coming months, the Euro is going to find some bids down here and the dailies are not suggesting yet that we should be getting too bearish at these levels.
Right now the upside looks pretty limited but if we do squeeze higher, sellers should be seen at 1.3450 and 1.3500.
The Euro is difficult to read at present and I would not be overly involved today and the price action looks as though it will be a bit choppy around here while the market digests Mr Draghi's comments. There is little of economic interest to drive the market today and it would not surprise me to see a session that ends up not too far from current levels.
For today, use 1.3360/1.3450 as a guide.
Economic data highlights will include:
F: EU Trade Balance, US Trade Balance, Wholesale inventories.
