EUR/USD: 1.3050The Euro has had a comparatively quiet session, chopping around between 1.3020/1.3100 as the market awaits the outcome of the G20 meeting. Although this is unlikely to have any direct reference to the Euro, the flow-on, from any mention of Japanese current monetary easing could have implications through the cross and thus the market is currently pretty much on hold.
An earlier Spanish auction, which successfully sold EUR 4.7bio of bonds today, exceeding the target of EUR 4.5b at slightly lower yields, saw the Euro well underpinned earlier on. It then turned a little lower following unfounded rumours of a French bank being in trouble. The softer US data, where the Philadelphia Manufacturing Survey unexpectedly contracted, kept the pressure mildly on the dollar, underpinning the Euro, but weighed on risk assets, with the S+P closing near its lows.
Technically there is little change for the Euro and it is currently hanging on to 1.3020, and more importantly 1.3000, although the downside still looks to be the more vulnerable. A break of 1.3000 would take us to the 50% pivot of 1.2744/1.3200 at 1.2970. Below here would target 1.2920 (61.8%) and 1.2850 (76.4%). It looks to me as though we may be forming a bear flag and if this is the case the target would be somewhere close to the 200 DMA, currently at 1.2910. We shall see.
On the topside, sellers remain at 1.3100, 1.3140 and at 1.3200 although the shorter term momentum indicators do not really suggest that these are in too much danger for the time being.
I suspect we are in for more of the same in the coming session, with the chances of an eventual break to the downside. There is not too much data today and it maybe the G20 statement, and any mention of Japanese monetary policy that drives it around. Look for another day of 1.30/1.31, with 1/2 a chance of drifting lower to 1.2950 to finish the week. If we are really lucky and the bear flag works, we will head towards 1.2910!
Economic data highlights will include:
G20 Meeting, German PPI, EU Current Account.
