EUR/USD: 1.3200The Euro moved a little higher early in the session, after the stronger than expected numbers indicated that the EU PMI manufacturing data rose to 50.1 in July,- back into expansion territory - and beat expectations of 49.1. The services PMI also improved to 49.6 beating expectations of 48.7. In Germany, the PMI manufacturing index rose to 50.3, also back into expansion and beat expectation of 49.2 while the services PMI rose much more than expected to 52.5 versus consensus of 50.7.
Later on, the dollar regained some ground after much stronger U.S. new home sales, which jumped by 8.3%, to their highest level since May 2008, against expectations of a 1.8% rise.
All this has meant is that things have balanced themselves out and that the Euro has ended up largely unchanged on yesterday's levels and from a technical point of view there is little to add.
Having reached the Fibo resistance at 1.3255 (76.4% of 1.3415/1.2753) a couple of times during the session, it failed to overcome the sellers, and the Euro has since reverted a little lower. This is the level that needs to be conquered in order to proceed towards 1.3300 and beyond, towards the downtrend resistance, now at around 1.3350, which in turn comes ahead of the 1.3415, 19 June high.
Euro strength is beginning to look a little less likely today and having broken back below the rising trend support, the indicators are now suggesting that a short term top may now be in place. The support levels to watch are at 1.3160 (formerly 61.8% resistance of the move from 1.3415/1.2753), and then 1.3137 (23.6% of 1.2753/1.3255). Beyond that, 1.3100 will see bids, below which, further buyers should arrive at the 61.8% Fibo support at 1.3055 (38.2% of 1.2753/1.3238).
The German IFO will be the key driver in Europe today, ahead of the US Durable Goods and Jobs data, but the US$ does look as though it may have bottomed out, at least in the short term, and selling rallies with a SL placed above today's high in the Euro may be a short term plan
Economic data highlights will include:
German IFO, US Durable Goods, Jobless Claims
