AUD/USD: 0.9025EUR/USD: 1.3595The Euro has rebounded strongly from earlier session lows after the market took as second look at today's US data and decided that it may not have been enough to constitute any immediate thoughts of tapering, and currently sits pretty much unchanged against the dollar ahead of today’s ECB meeting and then later, the US GDP data.
In Europe the Services PMI data came in rather mixed, with Italy and France contracted, while Spain and Germany expanded, highlighting the divergence in the individual components in the EU and keeping the market on its toes ahead of today’s Press Conference from Mario Draghi.
In the US, ahead of Friday’s Unemployment/NFP release, today’s ADP report rose by 215k, much better than the expected 173k, and the highest figure in 12 months. October's data was also revised from 130k, strongly up to 184k.
We shall have to wait and see whether the ADP release follows through to a strong NFP reading, but I would join the crowd and be a bit dubious of seeing any imminent tapering and I cannot see much happening on that front ahead of March, particularly with a handover of regime at the Fed coming in January.
Technically then there is little change. Having today reached a high of 1.3605, the Euro has yet to take out the recent high of 1.3621, which comes ahead of 1.3627 (61.8% of 1.3832/1.3294). Ahead of that, the descending trend resistance now lies at 1.3610, and thus these could all be taken out in one move if Mr Draghi is less dovish than expected on the Euro later today. There will then be some minor resistance at around 1.3650 above which could see acceleration towards 1.3710 (76.4%). While the 4 hour charts are still pretty flat, the dailies are showing the slightest signs of coming to life on the topside, so I suspect we may see a test of this, albeit possibly quite a brief one, ahead of tomorrow’s US data. A very dovish Draghi would quickly scupper that idea.
On the downside, there is some minor support at 1.3560, but not much more ahead of 1.3525, which has held well in the last few days and may prove tough to break. Below 1.3510 (daily Tenkan) would see a run towards 1.3485 (61.8% of 1.3398/1.3621/rising trend support) and 1.3475 (daily cloud base), which again should be very strong.
Be flexible today, and although I prefer to look for levels to sell the Euro still, I have a feeling that we may see a run to slightly better than current levels,in order to do so.
Economic data highlights will include:
ECB I/R Decision/Press Conference, US GDP. Jobless Claims, Factory Orders, Personal Consumption
