AUD/USD: 0.9100EUR/USD: 1.3065The Euro has had a choppy but mostly uninteresting session, hanging close to 1.3000 as the northern hemisphere summer doldrums look to be well upon us. Early dovish comments from the ECB's Hansson, indicating that there is room to cut rates further and that negative interest rates should not be ruled out helped push the Euro lower early in the session, before a bit of a turnaround following the softer than expected US retail Sales, that saw the dollar come under some pressure of its own.
Fitch downgraded the EFSF - European Financial Stability Facility- to AA+ from AAA, which, following on from the recent France downgrade, had precisely no effect on the Euro at all.
Technically, nothing has really changed, and ahead of Bernanke's testimony to Congress on Wednesday, I don't think we should be getting too excited about any possible directional movement, although there is a bit of data out of the EU and US later today to bounce it around within the 1.30/1.31 range
We do have the potential for a bullish flag forming (chart), and if the Euro were to take out 1.3200, we could head back to the 19th June 1.3415 high but that is probably for another day, possibly after Bernanke.
In the meantime I suspect another day of 1.30/1.31 could hold it. On the downside, if the support at 1.2990/1.3000 can be taken out, further support will be seen at 1.2980, 50% of last week's sharp rise from 1.2762/1.3205, with more buyers at 1.2925 (61.8%).
On the topside, above 1.3100, sellers will come in, ahead of 1.3200 at 1.3160 (61.8% of 1.3415/1.2762), and then again at 1.3260 (7604%).
The dailies still point higher and I suspect that dips over the next couple of days continue to be buying opportunities, however the 4 hour charts still point a bit lower, so all up I don't think we are going anywhere too far today, and probably not until Bernanke has testified, which could be the catalyst for another sell-off of the dollar.
Economic data highlights will include:
EU CPI, EU/German ZEW Survey, Trade Balance, US CPI, IP, Capacity Utilization
