AUD/USD: 0.9435EUR/USD: 1.3485The Euro continued its retreat on Friday, slumping to a low of 1.3480 (1.3470: 50% pivot of 1.3105/1.3833) and looking a very different proposition from earlier in the week when the market was wondering whether 1.4000 was going to be the next stop. Strong US housing data did nothing to hurt the dollar's cause on Friday, pushing the Euro to a 2 week low on growing expectations that the ECB will ease monetary policy, possibly as early as Thursday, in order to boost economic growth in the EU.
It will be a busy week of data ahead, starting with the EU Manufacturing PMI's and finishing up with the US October Unemployment/NFP, with plenty in between - see below.
From a technical point of view, the daily momentum indicators on the DXY (Dollar Index: 80.70) have now crossed to turn higher and further advances could well be in store. The Euro for its part was unable to bounce off the floor going into the weekend, and while I would expect 1.3480 to hold in the short term, thus allowing the short term charts to unwind their oversold condition, any decent rally still presents a sell opportunity. The points to watch on the topside are at 1.3515 and 1.3540 (both minor) ahead of 1.3560 (23.6% of 1.3833/1.3480) ahead of 1.3615 (38.2%) which currently is over the horizon.
The dailies have picked up a lot of steam on the downside, and on a break of 1.3470 support (and weekly Tenkan at 1.3460), it looks as though we could see a test of 1.3400 and possibly 1.3380 (61.8%). Before that though, the major rising trend support comes in at 1.3435 and there will be plenty of support, should we see it.
I don't think we should expect too much downside on the Euro today. It has come a long way and it would do it good to take a breather, but once the shorter term charts have unwound, we should be looking to sell it for a run below 1.3400, possibly for a return to the 100 DMA at 1.3333 and the 200WMA at 1.3320, which, if seen, should prove very strong support.
For Monday, use 1.3450/1.3530 as a guide, looking to sell into any strength.
Economic data highlights will include:
M: EU/Eurozone Mfg PMI's, US Factory Orders, NY ISM
T: EU PPI, US ISM Non Mfg PMI
W: EU/Eurozone Services/ Composite PMI's, EU Retail Sales, German Factory Orders,
T: ECB I/R Decision, German Curr/Acc, US GDP, Personal Consumption, Jobless Claims
F: German Trade Balance, US Unemployment. NFP, Core Personal Expenditure, Rts/Michigan Consumer Sentiment Index, Wholesale Inventories
