AUD/USD: 0.9550EUR/USD: 1.3360The Euro has done very little today ahead of the FOMC meeting on Wednesday, although it had a minor squeeze to the topside going into the NY close, and it looks as though we can probably expect more of the same in the coming session.
The general expectations have been turning towards the fact that the Fed will continue its current policy, although an article in the Financial Times today hinted that the Fed might begin to start tapering its monetary asset purchase programme. This saw equities and the commodity bloc turn down from their earlier session highs before the author of the story later denied that he had any inside information, which resulted in a recovery in both equities and the commodity currencies.
The story had no initial effect on the Euro, which had its quietest session in some while, although there was a late move in NY to 1.3380 before settling back to 1.3365.
The technical points to watch therefore remain pretty much unchanged today, although the rising trend support now sits nearby at 1.3320.
On the topside, 1.3400/50 (100 Month MA: 1.3435, 200 Week MA: 1.3450) remains well offered and there are plenty of traders looking to sell the Euro in this area. Above 1.3450, stop losses will be triggered and we could see a move towards the 13 Feb high at 1.3520. I would be surprised to see any move of this magnitude today and given that the dailies are becoming overbought, would be happy to join the sellers in the 1.34 area.
If the Euro heads directly lower, below the 1.3320 support, would see stops set off under 1.3300 which would head into bids towards 1.3250 (23.6% of 1.2796/1.3389), below which would hint at a decline towards 1.3200 and then 1.3160 (38.2%). Under here, there is now very strong support in the 1.3075/95 area where the 55,100 and 200 DMA’s are all converging, and is also 38.2% of the move from 1.2042/1.3710 (1.3075).
There is some event risk today, with Draghi due to speak ahead of the ZEW data and then the US CPI.
I remain of the view that selling into 1.3400/50 with a SL placed above 1.3460 is probably the way to go.
Economic data highlights will include:
Draghi Speech, EU, German ZEW, US Building Permits, US CPI
