AUD/USD: 0.9100EUR/USD: 1.3260Stronger US retail sales gave the dollar a bid tone today, rising for the fourth consecutive month, although slightly weaker than expected, and in doing so, kept the pressure on the downside as far as the Euro was concerned. The picture therefore remains unclear as to when the Fed will begin to ease back on its stimulus programme, but the focus is new beginning to turn towards the September 18 FOMC and until then the picture looks as though it will remain rather confused. Gold having risen strongly in previous sessions, today fell back on concerns that tapering will commence in September, while at the same time the US equity markets rose mildly on the chance that the Fed will sit on its hands until December, and in the meantime, will continue to pump the economy with cash.
The dollar did not have it all its own way though and its strength against the Euro was limited after earlier EU data indicated that both Germany's ZEW economic sentiment survey (42.00: 5 month high) and EU industrial output both rose by more than expected, underpinning the Euro.
Technically, it is beginning to look more and more as if a top is in place at last week's 1.3399 high, although at the same time, not too much has changed from this time yesterday, with the Euro currently trading well above the session lows of 1.3233.
The Fibo support at 1.3245 (23.6% of 1.2754/1.3400) could continue to prop the Euro up, but a drop below 1.3200 would see a decline to 1.3155 (38.2%) and back into the congestion support.
On the topside, decent offers should now be seen at 1.3300 and above there at 1.3340 and again at 1.3380 and 1.3400, which looks unlikely to be seen today. Above that, the heavy resistance at 1.3400/30 will set in but is beginning to look a little far away.
There is a bit of data out later on which may change that outlook, but if the German GDP does not meet expectations, this may be the catalyst to push the Euro lower. Overall I suspect another rather tedious session lies ahead and 1.3200/1.3300 would not surprise. The Fed's Bullard will be talking later in the day and will want to keep an eye on what he has to say for any further hint of when we might expect tapering to begin. Expect more confusion!
Economic data highlights will include:
EU/German GDP, US PPI, US Fed Bullard speech
