AUD/USD: 0.9386EUR/USD: 1.3585The euro shot higher to reach 1.3606, an 8 month high against the dollar today, after the ECB left rates unchanged , with Mario Draghi announcing in his press conference that the bank is prepared to do more to boost growth, should the economy warrant it. The Euro was assisted, as well, by the Italian PM winning the no confidence vote to remain in power, avoiding further turmoil in the Italian political scene. The dollar was also put under pressure by the weaker than expected ADP US jobs report which showed 166k jobs were added in the private sector in September, missing expectation of 177k.
The other main point of focus remains the gridlock in the US Government, with the market concerned that the Oct 17th date to lift the debt ceiling is fast approaching, without any apparent compromise on either side to reach any kind of deal. If nothing positive happens, then things really could look bleak, with the chances that the US could default on its debt and undergo further credit ratings cuts which would undermine future economic growth which could have major ramifications for the dollar.
Technically the way now looks open for a run towards the 1 Feb high at 1.3710 after the solid support at 1.3500 held through the current session. I think the price action is likely to be choppy though as the 4 hour momentum indicators are not looking particularly strong. The session high of 1.3606 will see the first selling interest ahead of 1.3650 and 1.3700. If we ever get beyond 1.3710, look for a run towards 1.3810 (61.8% of 1.4939/1.2041).
On the downside, 1.3500 again looks pretty solid, below which would see a return towards the first Fibo support, now at 1.3487 (23.6% of 1.3104/1.3606). Below this would head towards minor support at 1.3450 and then towards 1.3410 (38.2%).
Today is a German holiday, so it could be a fairly quiet session through to the NY open. There are various Fed members speaking, including Bernanke, in the next few hours, and later on, the US Jobless Claims are due to be released. The EU Composite PMI's are also due which should provide some action but I suspect the Euro today will trade within a 1.3550/1.3620 range.
Economic data highlights will include:
German Unity Day, EU Services/Composite PMI’s, Retail Sales, US Initial Jobless Claims, Factory Orders, ISM Non Mfg PMI, Bernanke Speech
