EUR/USD: 1.2935It was a wild ride for the Euro today, initially slumping to 1.2745 after the ECB left rates unchanged at 0.75%, as widely expected, with Mario Draghi pledging to keep policy accommodative as long as necessary. Having touched the lows, the Euro rebounded sharply given that Draghi had actually offered nothing new, and a market that was caught badly short was given further impetus after the US Jobless claims jumped by much more than expected to 385k. This followed on from yesterday's soft ADP jobs data and now has the market concerned that the Non Farm Payroll data will not live up to the expectations of +200K and added pressure to the downside for the dollar.
The Euro was assisted by huge demand for Eur/Jpy, which has risen by over 4% today after yesterday's BOJ meeting. This now lies at 124.40 and if it can get above strong resistance at 124.60 would appear headed for 126+.
Technically, the Euro, having briefly made a new 4 month low, turned around with a vengeance and has taken out plenty of shorter term resistance levels and will close back above the 200 DMA (1.2882), having already taken out all the stops paced above here, in so far climbing to a high of 1.2948.
Today will be all about the NFP so it would pay to stay pretty neutral, but the short term charts have plenty of positive momentum to suggest a possible move to 1.3000 and above.
Points to watch will be, on the topside at 1.2970 (23.6%1.3710/1.2745) and then at 1.3000, 1.3047 (25 March high) and at 1.3114 (38.2%).
On the downside, the 200 DMA is now the immediate support, below which would see a return towards 1.2830 and 1.2800. Today's low now looks some way off and the 1.2680 target appears to be on hold for a while to come.
Be flexible today as it could get rather violent later in the session. Before the NFP we get the EU GDP and Retail Sales data, both of which will keep the markets alert and looking ahead to what Mr Draghi may do at the next ECB meeting.
Good luck. Have a good weekend.
Economic data highlights will include:
EU GDP, Retail Sales, US Unemployment, NFP
