AUD/USD: 0.8775EUR/USD: 1.3660The Euro has drifted a little lower, with the dollar generally underpinned by the better than expected US consumer confidence data (80.7 against the expected 78.1) that cemented the expectations that the Fed will announce further tapering of the stimulus programme at the FOMC meeting later today. However, any further dollar strength was stymied by the soft US Durable Goods data which dropped sharply by -4.3% in December versus expectation of a 1.0% rise.
Until the Fed decision, the market will be on hold, with little else to move the market although President Obama is due to make his State of the Union Address and will be a focus in early Asia.
The points to watch remain pretty much unchanged and It probably is not a bad day to get the admin out of the way.
Having been down to 1.3628 in Europe, the Euro is back at 1.3660 and hanging on to the support at this level provided by the daily cloud top and the 38.2% Fibo level of the rise from 1.3507/1.3739. A break below the session low would head towards 1.3600 and the 100 DMA, which is rising fast, currently at 1.3588. Further out, 1.3525 is 61.8% of 1.3294/1.3892 and then below 1.3500 would head down towards 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, although the Fed would have to be pretty hawkish on their outlook to get anywhere close to this, which is highly unlikely.
On the topside, in the medium term, there will be Euro sellers near the recent highs within the 1.3720/40 area. Above that would head on to the base of the monthly cloud, descending quickly but currently at 1.3755, which should be strong, but a break of which would take us back to 1.3800, and above, towards the 27 Dec, 1.3892 high. If the Fed are overly dovish in their outlook, then we could see 1.3800+, sooner than expected, although this is unlikely, given the expectation of an increase in tapering, and if we do see it up there I would prefer to be a seller.
All depends on the Fed and until then the market will be comatose, although the German Consumer Confidence may provide the odd blip, but until the Fed, stay neutral. Medium term, I still think the Euro heads lower and back towards 1.3400.
Economic data highlights will include:
German Consumer Confidence, FOMC Meeting
