EUR/USD: 1.3385 The Euro, having almost died of boredom through the first half of the session, briefly came back to life following the release of the much better than expected German ZEW Business Sentiment survey (48.2 v exp 31.5) which was the best reading in almost 3 years. A quick spike to 1.3372 was quickly slapped back into place, with the concerns about the possible outcome of the Italian election capping further gains. Things improved little thereafter, although Fridays high was briefly taken out, but having peaked at 1.3393, it has come to a halt and now sits just below this, right on the 200 Hourly MA, and looking pretty comfortable at current levels.
Things may change later in the session when we get the German CPI and PPI, followed later on by the FOMC minutes of the previous Fed meeting, but until then the points to watch remain unchanged from yesterday. There are good offers in the 1.3400/05 area, but stops are lined up above there which could take us up towards 1.3460 (38.2% of 1.3710/13305). This looks as though it could be the direction in the short term, given the mildly bullish divergence and the positive momentum on the 4 hour charts, but progress, if seen, looks as though it will be very slow for the next few hours. If we do head higher, further resistance should be found at 1.3500 (50% pivot of 1.3710/13305 ).
On the downside, 1.3350 is where we spent much of the session, and below this would see a return towards 1.3300 which has held so far this week. Below this would turn towards 1.3250 but the indicators are not suggestive of a move of this magnitude to the downside in the near term
Further out, the dailies are still pointing lower and therefore the upside, while favoured in the short term, looks fairly limited before we turn to head back a little lower and thus overall it looks as though we are going nowhere too far, too fast, in the next couple of days.
Economic data highlights will include:
W: German CPI, PPI, US PPI, Building Permits, Housing Starts, FOMC Minutes.
