AUD/USD: 0.9225EUR/USD: 1.3065Having held 1.3000 in Asia, the slightly improved EU data helped the Euro squeeze a little higher through the European session. EU unemployment came in slightly better than expected at 12.1% (v 12.3% exp) but above the previous 12.0%, while the flash PMI's, although still in contraction mode, were generally slightly improved from the previous readings: EU manufacturing PMI for June: 48.8 (v 48.7 exp), with Germany at 48.6 (v 48.3 exp), France 48.4 (48.3 exp) and Italy, the big improver at 49.1 (exp 47.8).
Later in the US, the ISM manufacturing index rose more than expected to 50.9 in June, back to expansion territory and helped to generally underpin the dollar as risk sentiment improved. Some caution was apparent though, ahead of Fridays NFP and US Jobs data, after the employment index declined to 48.7 from 50.1 in May, falling below 50 for the first time since September 2009.
For its part, Eur/Usd has had a reasonably quiet 1.3004/1.3066 range and most of the action took place elsewhere as the market now awaits the ECB rate decision on Thursday (no change expected), to be followed up by Mario Draghi's press conference, likely to be a rather dovish affair, and which today helped to limit any further Euro gains.
Technically there is little to add from the weekend outlook.
There is good buying interest in the 1.2985/1.3000 area and the Euro looks likely to hold this in the short term at least although a break would suggest a run down to 1.2940 (76.4% 1.2796/1.3415) and then 1.2900, ahead of 50% Fibo support of 1.2042/ 1.3710 at 1.2876 and weekly cloud support at 1.2840. Below here 1.2796 comes into play and should be strong support having been the 17 May low and is also the neckline of the Head/Shoulder formation that we have been watching for the last few months. A break would see much lower levels but at this stage not worth getting excited about.
On the topside, the short term resistance is at 1.3065, above which we would see 1.3085 (23.6% of 1.3415/1.2985) and possibly 1.3100 again. Above that would head towards 1.3147 (38.2% of 1.3415/1.2985) and then possibly 1.3200 (50%), although this looks unlikely today.
I still prefer selling in the 1.3100/50 area, so patience is required and while the Euro is chopping around between 1.30/1.31 there is not too much interest to become involved. Today's economic highlight will be the US Factory orders and it could be another choppy session, going nowhere fast while the market sits tight ahead of the ECB, and on Friday the NFP.
Economic data highlights will include:
EU PPI, US Factory Orders, Total Vehicle Sales
