EUR/USD: 1.3185Following the sell-off in late NY yesterday, after the release of the FOMC Minutes, Asia took the Euro below 1.3255 support , triggering stops before a mild bounce going into early Europe. That didn't last long, once the Eurozone PMI data was released with both the EU Manufacturing figure of 47.8 (48.5 exp) and the Services reading of 47.3 ( 49.2 exp) coming in below market expectations. German and French data were also weak and did nothing to help, causing the Euro to dip below 1.3200. Later on, the US manufacturing data was also weak, but has failed to do much to turn around the concerns that the monthly QE might be pared back in coming months and the Euro is currently hovering just below 1.3200, not too far above the session low at 1.3160
Technically, the potential Head and Shoulders that we mentioned yesterday looks to be unfolding. If this turn out to be the case then the target is at around 1.2840.
In the meantime the Euro is in a downchannel, having so far reached the Fibo support at 1.3164 (76.4% of 1.2995/1.3710). This should be quite strong in the short term, although the 4 hour charts are pointing lower and further declines later today towards 1.3125 would not surprise. The shorter term charts are now quite oversold so further downside below here might be problematic for the coming session, but buyers would be found at 1.3100 and then at 1.3085 (38.2% of 1.2042/1.3710).
On the topside, there should be short term sellers now at 1.3200 and then at 1.3240. The H/S neckline is at 1.3292 and it should not be discounted that we see a squeeze back to this level in coming days, but probably not today and some trade not too far from 1.3200 looks likely before the downside resumes. Today's main events will be the German GDP and IFO, but with little out of the US.
Economic data highlights will include:
German GDP, IFO, EU Economic Commission Growth Forecasts.
