AUD/USD: 0.9540EUR/USD: 1.3090Having again squeezed up to the resistance in the 1.3100/10 area in Asia, the Euro softened through Europe after the poor EZ GDP (-0.2 % qq v-0.2% exp) and Retail Sales (-0.5% mm v - 0.1% exp). The EU Services PMIs were mixed and had little to no effect.
Since then, the mixed data from the US has seen a fairly cautious approach ahead of Friday's NFP data, with a mild sell-off in the US$ and in equities. While the ISM non-manufacturing index was better than expected at 53.7, the ADP grew just 135k in private sector jobs (exp 170k).
The Euro has had a pretty quiet session and while it held the support at 1.3050 through Europe, it has been unable to successfully overcome the 100 DMA (1.3107) and saw a high after the US data of 1.3113 before returning to the levels of this time yesterday. The market will now turn its focus to today's ECB meeting (no change expected) and the Press Conference at which Draghi will probably come up with the normal mantra that while downside risk remains, he can see the potential for some upside progress in the months ahead.
Technically little has changed, although the 4 hour charts do show the potential for further gains due to the bullish flag that seems to be forming. Good sellers remain at around the 100DMA and then at the Fibo resistance at 1.3112 (38.2% of 1.3710/1.2742). Above 1.3120 though would see stop-loss driven buying, that could take us quite quickly on to 1.3190 and possibly 1.3220 (50% pivot). Beyond here we could test 1.3242 (1 May high), above which, as I have previously said, I would start to become a little nervous of the medium term Euro bearish view. Until then we remain with it.
On the downside 1.3050 and then 1.3033 (200 DMA) provides the immediate support, below which would head back to/below 1.3000 and towards the 55 DMA at 1.2980 ahead of 1.2940 (minor) and then 1.2900. Back below here would see another attempt at the strong 1.2820 and a break would head towards 1.2800 (17 May low@ 1.2796). Under this, 1.2740/70 will continue to see plenty of buyers and I don’t think we are ready for it yet. If/when we do get there, look for further bids at the 50% projection of the decline from 1.3710/1.2744 from 1.3242 at 1.2758 and then at the 1.2744 4th April low. Below this there are minor supports at 1.2685 and at 1.2660 but not too much to hold it ahead of the 61.8% projection at 1.2645.
As for today, it would not surprise to see similar session, with direction to be provided by Mr. Draghi. Assuming that he does not say anything too surprising, we could well carry on in the same vein until tomorrow's jobs data. In the meantime, use 1.3050/1.3110 as a guide with a tight stop and reverse on either side.
Economic data highlights will include:
ECB I/R Decision/ Draghi Press Conference, German Factory Orders, US Jobless Claims
