AUD/USD: 0.9290EUR/USD: 1.3430The Euro is a little higher today as short covering continues while the shorter term charts unwind their oversold condition. There is little data out today from either the EU or the US so the drift, possibly to slightly higher levels looks set to continue.
The squeeze higher has come about despite the soft German CPI which slowed to 1.2% in October which was in line with expectations, although this was its lowest level in more than three years and was also down from 1.4% in September.
Technically, the Euro has some short term positive momentum and looks as though it could take a look at the 100 HMA at 1.3470, which is also where the top of the daily cloud lies and should offer reasonable resistance. A break of this would see some acceleration towards 1.3500 (1.3497: 38.2% of 1.3832/1.3294). The daily Tenkan is next up, at 1.3516, which lies ahead of the daily Kijun at 1.3565, but which I think we are unlikely to see today.
On the downside, the Euro now has some minor support at 1.3400 ahead of the session low of 1.3358. It has managed to hang on above the 100 DMA at 1.3342 and this appears unlikely to be seen today. If wrong, a break would head towards Thursday’s low of 1.3294 (Weekly Kijun: 1.3287), below which 1.3274 is 76.4% of 1.3105/1.3832. Beneath there would see a run back towards the 2000 DMA at 1.3216 and under that, it would begin to look as though are going to retrace the whole of the move higher that began at 1.3105.
Although the dailies still point lower, I think the downside is a little limited today and short covering could continue to push it on towards 1.3500, although in the absence of any major data it could be a bit of a drift as the shorts get slowly squeezed.
Use 1.3410/1.35 as a guide for now. Short term trader can look to buy the dips, while more medium term traders might want to look to sell into strength in preparation for the medium term move lower that I suspect lies ahead.
Economic data highlights will include:
EU Industrial Production
