EUR/USD: 1.3115The Euro bounced off its 1.3033 low after Friday's better than expected Non Farm Payroll and US Jobs data, but remains vulnerable to further losses following Thursdays decision to cut rates. The press conference, at which Mario Draghi suggested that if necessary he was ready to impose negative deposit rates given the dire state of the EU economy, did not help and would appear to severely limit any real upside progress for the Euro. The outlook from the EC, which last week downgraded the 2013 projection for the region to a 0.4% contraction, is probably a sign that we can expect the medium term pressure to remain on the downside.
From a technical perspective, the Euro does not look as though it wants to do too much apart from to continue to chop around current levels, possibly between the 100 DMA (1.3160) and the 200 DMA (1.2960). The charts are indecisive, as is the DXY (Dollar Index), and any sort of directional move may be somewhat limited although the bias is to sell Euros into rallies towards 1.3200, with stops placed above last week's 1.3242 high. Above there would potentially lead to a move on to 1.3336 (61.8% of 1.3710/1.2744), but I don't think we are going to see these sort of levels any time soon.
On the downside, there is solid support above the 1.2960 level at 1.3000 and even closer, at Fridays 1.3033 low (55 DMA). If we eventually take all these out, then look for a steeper decline towards 1.2935 and 1.2860, both minor Fibonacci support levels.
For Monday, given that the momentum indicators are rather mixed, I would not be too married to a position in either direction, keeping both SL and TP orders relatively tight but preferring to trade from the short side and selling into strength. There is a fair bit of secondary data out from the EU and Mario Dragi will be speaking, which will provide the day's trading opportunities
Economic data highlights will include:
M: EU Services, Composite PMI data, EU Sentix Investor Confidence, Retail Sales, Draghi Speech
T: German Factory Orders, US Consumer Credit
W: German CPI
T: Ascension Day Holiday (Germany/France), ECB Monthly Report, US Jobless Claims, Inventories
F: German Trade Balance, Bernanke Speech
