AUD/USD: 0.8930EUR/USD: 1.3520Despite a brief dip lower after the worse than expected Spanish employment number, - which rose by 2.4% mm in January (4.8 mio) -, the Euro appears to have gone into a holding pattern ahead of Thursdays’ ECB I/R meeting. In other EU data, the PPI rose 0.2% m/m, but dropped -0.8% y/y in December. The dollar received some mild support later in the NY session from the slightly better than expected US factory data.
The range has therefore been a narrow 1.3492/1.3538 and we could be in for another day of sideways consolidation, although the Services/Composite PMI's will provide some interest, as will the EU Retail Sales, and then later, the ADP Jobs numbers will again be scrutinized for a hint as to what the NFP might bring us, on Friday.
Technically there is little change, with the hourly charts now completely flat, while the 4 hourlies continue to recover from their oversold condition. Thus, I suspect that the session low, and below that, the recent 1.3480 low, should hold the Euro up for now. If wrong, then look for a run towards 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and eventually, 1.3435 (76.4% of 1.3294/1.3892). Below there would bring the 21 Nov low of 1.3398 into focus, ahead of the 200 DMA at 1.3373.
On the topside, above the session high at 1.3535, we might look for a squeeze towards the first minor Fibo resistance at 1.3573 (23.6% of 1.3892/1.3476), where minor downtrend resistance also lies, and thus, should be reasonably strong. A break of this would head on towards 1.3600(200HMA/100 DMA/Daily Cloud Base) and then possibly to 1.3635 (38.2%).
The dailies still point a bit lower and so while the charts are mixed, I would remain fairly neutral on the outlook, but today would again use 1.3485/1.3570 as a guide, with the longer term preference still being to sell rallies, looking for an eventual run lower towards the 200 DMA (1.3373).Otherwise wait for the ECB and for Mario Draghi’s Press Conference and take the lead from what he has to say.
Economic data highlights will include:
EU Services/Composite PMI’s, EU Retail Sales, ADP Unemployment, US ISM Non-Mfg/Services PMI
