AUD/USD: 0.8800EUR/USD: 1.3560DThere is little to add today, with most markets relatively steady given the US public holiday. Having initially headed a little lower in early Asia, on the back of a weaker Nikkei, the Euro has steadily recovered since the Chinese GDP, which at 7.7% was pretty much as expected, but caused some mild short covering to levels slightly higher than the weekend close.
Today does not look like being much more inspiring, with once again, little to drive any volatility from the US, although the German/EU ZEW economic sentiment surveys will provide some interest, with the markets expecting a continuation in the slowly improving confidence, which could underpin the Euro in the coming session. On the other side of the coin, the Euro remains under some pressure amid concerns that the subdued inflation outlook may prompt the ECB to ease monetary policy further in order to safeguard the fragile recovery in the EU.
One thing to note is that the overnight bank lending rate, has been back at 0.30%, above the 0.25% that banks pay to borrow from the ECB. At the last ECB meeting, Mario Draghi said that an "unwarranted" rise in interbank lending rates would be one of two possible triggers for another rate cut, so is worth keeping an eye on.
Technically there is really no change from yesterday. There is good resistance now at the current level, this being the 100 DMA/Daily Cloud Base, but if we continue to squeeze higher, further sellers will be evident at 1.3580 which provided a base for the last couple of day’s trade. Above 1.3600 (23.6% of 1.3892/1.3507) would then head towards 1.3615 (Daily Cloud Top), 1.3630 and 1.3650 (38.2% of 1.3892/1.3507). I can’t really see it getting close, but we may see the odd spike higher, and if so, I think would provide a selling opportunity.
On the downside, back below 1.3540 would probably see another swing to the day’s low (1.3507), where good bids are lined up ahead of 1.3500 Ahead of that though 1.3525 is 61.8% of 1.3294/1.3892 which could hold the base for a while. Beyond 1.3500 heads down towards 1.3485 (minor), 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) beyond which, 1.3435 (76.4% of 1.3294/1.3892) will attract.
For today, use 1.3500/90 as a guide, with a mild bias towards selling into strength but without looking for a great deal of action today, but keep an eye on the ZEW.
Economic data highlights will include:
EU/German ZEW Economic Sentiment Survey, German Constitutional Court Ruling on OMT’s
