EUR/USD: 1.3075The Euro has slipped back slightly after ECB President Mario Draghi repeated last weeks comments in suggesting that the Bank is ready to act, if necessary, to address the economic weakness in the EU. Having run into decent bids at around 1.3050 is has since stabalised.
Looking ahead, the charts are all pretty flat at present and another day of chopping around aimlessly would not surprise. 1.3050 still has strong buying interest, below which, the 55 DMA, currently at 1.3025, supported the declines on Thursday and Friday. Should we head below there, there will be further demand at 1.3000 and then at 1.2965 (200DMA).
On the topside 1.3100 and the day's high at 1.3140 will see good sellers ahead of the 100 DMA at 1.3155.
Thus it looks pretty range bound in the absence of anything new coming to the market. Today's data (German Factory Orders, US Consumer Credit) is unlikely to move it much and unless there is an unexpected political statement I cannot see it going too far in either direction. The one thing that could light the fire under the Euro is that if US$/JPY goes through 100.00, which could see the Euro head higher on demand for EURJPY. I am not sure that there is enough to drive this today.
In the longer term, it may be necessary to start to keep a closer eye on the dailies. There is a potential head/shoulder formation building with a neckline at 1.2770. If this turns out to be correct, a break would see a target of around 1.1800. That is a long way off at this stage, but worth keeping an eye on.
For today, use 1.3000/1.3140 as a guide again, with a mild preference to trading from the short side, selling into rallies.
Economic data highlights will include:
German Factory Orders, US Consumer Credit
