EUR/USD: 1.2883Generally slightly weaker US data in the form of the Jobless Claims, the Philly Fed and the CPI all ensured that any dollar strength was kept in check today, dampening any immediate expectation of any likely winding down of the QE programme, in what was essentially pretty much a rangebound session that has seen the Euro recover mildly from its session lows.
Late in the session comments from the Feds Williams regarding a potential summer tapering of the asset purchase programme, with it finishing altogether by the end of the year has seen the Euro retreat from its 1.2929 highs and return to be pretty much unchanged over the session.
With little economic news out today it may be that we are in for a relatively quiet end to the week although Bernanke will be speaking later, after the market has closed.
Technically, there is no change after the Euro recovered from its lows at 1.2845 and squeezed up to 1.2929 resistance before returning to 1.2885, where it currently sits.- unchanged from this time yesterday.
Thus the trend support, now at 1.2860 (red line-chart), remains intact for now, and with the short term momentum indicators beginning to point a little higher, it looks as though this could remain the case today, in the absence of anything unforeseen, although it is not too far away and a weekly close below it would pressure the downside next week..
If we do see a bit of a squeeze higher, the first point of resistance is close by at 1.2925 (23.6% of 1.3193/1.2842) which has been tested, - today's high being 1.2929 - and so far remains intact. Beyond there, would head towards 1.2940 which has recently acted as a minor pivot and above that would find sellers at the congestion around 1.2975, which is also 38.2% of 1.3193/1.2842. The 200DMA is now being crossed by the 55 DMA at 1.2998 and I would be surprised to see it above here in the near future, but if wrong look for a squeeze on towards 1.3058 (61.8% of 1.3193/1.2942).
Below 1.2960, the downside support at 1.2840 is strong and looks likely to hold for now, but if wrong, 1.2800 and then more importantly 1.2775 will see good buyers. As I have previously said, if 1.2775 breaks, then it would set in place a break of the neckline of the daily head and shoulders formation which could eventually take us to the 1.17 area. I think we are too early for a move below 1.2770, but it is worth watching.
For today in the absence of any major data, look for more of the same, perhaps with a mildly higher bias with 1.2940-1.3040 looking likely to cover it.
Economic data highlights will include:
EU Construction Output, Rts/Michigan Consumer Sentiment Index
