EUR/USD: 1.2850The US$ has generally weakened across the board after both the ISM Services figure (54.4 against exp 56) and the ADP employment figures came up, short of expectations, with the ADP at +158K (exp 200K) in particular being of concern, ahead of Fridays Non Farm/Jobs data. The Euro was able to make mild gains but ahead of the ECB meeting today little was likely to happen and any further upside for the Euro is somewhat limited by the myriad of concerns in the EU, not least the political situation in Italy, where little progress has been made to solve the impasse following the recent election.
The ECB are generally expected to leave rate unchanged although there has been some speculation that they may actually cut again today, in order to help boost economic growth, with Mario Draghi seemingly likely to be rather downbeat again at the press conference. This has also limited the upside for the Euro and we have had another pretty tight range although we are now trading slightly above the channel that has guided price action in recent sessions.
That aside, not an awful lot has changed from a technical perspective and we have yet to reach the weeks highs at 1.2877.
The 4 hour charts are flat and so, for the time being, a neutral stance is the best bet, and this could well remain the case until the NFP tomorrow. The 200 DMA is at 1.2875 and it would not surprise to stay pretty close to this in the next 24 hours. If we do head a bit higher, expect further gains towards good sellers, reportedly at 1.2890/00, beyond which the Euro would head to 1.2970 (23.6% 1.3710/1.2750).
To the downside, there are now buyers at 1.2800 and again at today's 1.2790 low, below which the 27 March base at 1.2750 will see bids, ahead of 1.2700 and the important 1.2680 support (61.8% of 1.2042/ 1.3710, and also the base of the weekly Kumo cloud). The lows are creeping very slightly higher on a day by day basis, and although the charts are offering little hint either way, I would not be surprised to see a test of 1.2900 toady and possibly a bit higher.
Don't get too carried away in either direction as the data today will drive direction, but from a technical perspective, I prefer a short term move to the topside, before the dollar reasserts itself for an eventual test of 1.2680.
Economic data highlights will include:
ECB Meeting
