AUD/USD: 0.9238EUR/USD: 1.3160The Euro had a brief dip after the German ZEW economic sentiment survey unexpectedly dropped to 36.3 in July (expected 40), but bounced back strongly as the market began to focus on Ben Bernanke's testimony to Congress, tomorrow, at which he is expected to reiterate that U.S. monetary policy will remain accommodative for the time being.
Other data included the EU CPI, which at 1.6% was pretty much as expected, the EU trade surplus at Euro 66. bio which as better than expected, and the EU ZEW, also an improvement, which came in at 32.8 (exp 31.8)
The Euro has closed at the higher end of the day's range, currently up against Fibo resistance (61.8% of 1.3415/1.2762) as traders continue to cut out long dollar positions. Technically, as we wrote yesterday, the dollar remains under pressure ahead of Bernanke and this looks likely to continue, despite the fact that it must be pretty much written in to the price that he will remain dovish on his outlook.
The 4 hour charts appear to be struggling a little to continue to the topside, but the dailies remain positive and a break of the immediate resistance would lead to last week's top at 1.3205, above which would suggest 1.3255 (76.4%). Above this, there is downtrend resistance at 1.3360, which in turn comes ahead of the 1.3415, 19 June high.
On the downside, which currently looks a little less likely, unless Bernanke mentions tapering (which would send the market into a spin) and would ensure that the Euro does a smart about turn towards 1.3100, below which 1.3085 and then at 1.3035 would come into view again.
1.3100/1.3200 may cover it until Bernanke speaks, allowing the shorter term charts to unwind from having become a little overbought, after which, anything could happen, but the longer term charts suggest that the Euro may be a bit higher this time tomorrow. Watch out for the Beige book data.
Economic data highlights will include:
US Building Permits, Beige Book, Bernanke testimony to Congress
