AUD/USD: 0.9280EUR/USD: 1.3040It has been another quiet session for the Euro with any potential gains limited by the somewhat dovish outlook from Mario Draghi in the previous session, where he pledged to maintain the current easy monetary conditions. At the same time, the US$ was unable to take any advantage of the situation, with today's data providing a mixed picture, and thus we remain not too far removed from 1.3000.
Initial jobless claims dropped to 346k, slightly below expectation of 348k. Personal income rose more than expected by 0.5% in May, while spending rose 0.3%. Headline Personal Consumption rose less than expected by 1.0% yy while core Personal Consumption rose 1.1%. Earlier in the day, German unemployment fell by -12K, better than the expected +8K, with the headline rate being 6.8%.
Technically then there is no change from yesterday, although it is a bit of a concern for the Euro that it is hanging around just above the weeks lows but apparently unable to make any headway to the topside. Sellers remain in place between 1.3060/1.3085 and this is proving a tough nut to crack. 1.3058 was the previous low and above here, 1.0375 (100,200 DMA’s and) and 1.3085 (23.6% of 1.3415/1.2985, 100,200 DMA) will provide hurdles to be overcome, ahead of 1.3100. Above here would see further gains towards 1.3147 (38.2%) and then possibly 1.3200 (38.2%), although this looks unlikely.
While the 4 hour charts do suggest that we could squeeze a little higher, the dailies still point sharply lower, and thus, selling into any near term rally still remains the preferred strategy. The points to watch on the downside remain unchanged and back below 1.3000 and then beneath Wednesdays 1.2985 low, would suggest a run down to 1.2936 (76.4%), ahead of 50% Fibo support at 1.2870 (1.2042/ 1.3710).
Overall it looks likely to be a fairly rangebound session and end of month flows could dominate, but a slightly higher Euro at some stage in the session to test the 1.3085 area, before a resumption of the downside, probably not til next week, would not surprise.
Economic data highlights will include:
EU Council Meeting, German Retail Sales, CPI, Chicago Purchasing Managers Index, Rts/Michigan Consumer Sentiment Survey
