EUR/USD: 1.3110The Euro climbed today to reach 1.3138 following an Italian bond auction at which EUR 4.0b in 3 year bonds were sold at 2.29%, lower than the 2.48% at the March auction, while EUR 1.67b of 15 year maturities were sold, at 4.68%, down from the previous 4.9%.
Elsewhere the data from Europe was pretty much as expected with German CPI for March at +0.5%. In the US, the Jobless Claims came in lower than expected at 346K (against 360K exp) and helped out the US$ mildly, putting a cap on the Euro.
The Euro remains well underpinned by the flows from the Yen and the cross remains rampant, currently at 131.00, and looking to go a fair bit higher once US$/Jpy breaks 100.00
Technically, we have currently come to rest right on the Fibo resistance at 1.3112 (38.2% of 1.3710/1.2745) having tested the higher hurdle at the 100 DMA (1.3130). This remains strong, although if we do break higher we should then head to 1.3162 (28 Feb high), 1.3200 and then 1.3226 (50% Fibo).
Support remains intact at 1.3050, having tested it earlier in the day (low 1.3042). I suspect that this will continue to be the case, with Eur/Jpy purchases ensuring that the downside remains well protected above 1.3020 and then at 1.3000. Below this would take us back to 1.2970 and then to 1.2925 (50% of 1.2745/1.3100).
While the upside looks to be mildly favoured, the indicators do look to be running out of a bit of steam and I suspect that we are going nowhere too far until late in the session when the US retail sales will wind up the economic data for the week. Overall, I suspect we could be in for a session contained within 1.3070/1.3160, with dips looking likely to be reasonably shallow while demand for Eur/Jpy remains high.
Bernanke will also be speaking.
Economic data highlights will include:
EU meeting, EU Industrial Production, US Retail Sales, PPI, Inventories, Rts/Michigan Consumer Sentiment Survey, Bernanke Speech.
