AUD/USD: 0.9500EUR/USD: 1.3470The Euro has been unable to hang on to its gains above 1.3500 after a soft EU PPI reading that fell 0.9% in September from a year earlier after dropping 0.8% in August, worse than the expected 0.7% contraction, and heightening speculation of an ECB rate cut at tomorrow's meeting. Before then we get to see the EU Services PMI and Retail Sales which will give a further indication of what the ECB may do.
The Euro therefore remains heavy but sits above important support in the 1.3430/40 area and until this gives way it is hard to become too bearish, especially given the bullish divergence that is beginning to appear on the 4 hour charts.
The points to watch remain pretty much unchanged from yesterday and on the down side, support remains in place at 1.3460 weekly Tenkan), and then at the Monday session spike low at 1.3441, where the major rising trend support now sits and therefore should be strong. Below this level would see a move towards 1.3400 and under that would see a run towards 1.3377 (61.8% of 1.3105/1.3833) but not today I suspect.
On the topside, 1.3500 once again becomes the first hurdle to clear, ahead of the session high at 1.3521. Beyond that 1.3530 (23.6% of 1.3833/1.3441/1 hour cloud base) and then 1.3590 (38.2%) would see sellers emerge ahead of 1.3625 (daily Kijun) which is currently over the horizon.
Economic data highlights will include:
EU/Eurozone Services/ Composite PMI’s, EU Retail Sales, German Factory Orders
