AUD/USD: 0.9460EUR/USD: 1.3580The Euro finally saw some serious action today following the combination of a sharp fall in EU inflation data and a rise in unemployment, which was above expectations (12.2% vs exp 12.0%) and which triggered speculation of a rate cut next week, and then later, the release of the Chicago manufacturing PMI which expanded at its fastest rate in 30 years in October.
The all up effect was fairly negative for the Euro which fell through the 1.371 support and then took out the support levels all the way to a low of 1.3575 in a steep decline that looks as though it still has some way to run if the momentum indicators are to be believed.
There is not too much data out today, although if the manufacturing ISM is as strong a reading as the Chicago PMI, we may well see the dollar make further advances.
Having broken the first rising trend support, the points to watch are, below the session lows, at 1.3553 (38.2% of 1.3125/1.3830), which should be strong, and then 1.3500. The major rising trend support is still some way off, currently at 1.3425.
On the topside, we need to regain 1.3600 and then 1.3615 to make any substantial advances towards 1.3675 (38.2% of 1.3833/1.3585), although the short term momentum indicators are betting against any such move.
The hourlies are now oversold and may need to make some kind of recovery in order to unwind a little, although the $ does look as though it has some legs and may see it test the downside for the Euro in the days ahead.
For today I would use 1.3520/1.3620 as a guide. It is a partial EU holiday and so may be quiet until NY.
Economic data highlights will include:
US ISM Mfg PMI, US Total Vehicle Sales
