AUD/USD: 0.8915EUR/USD: 1.3535The Eur/Usd endured a pretty dead session until the US data provided some short term volatility that saw a spike up to the high of 1.3555, followed by an equally quick drop back to 1.3500, before chopping around within the range until the end of the session
In Europe, the mixed PMI’s did little to add much interest, although for once, Spain and Italy were better than expected, while Germany was on the soft side, and the overall EU figure came in at 51.6 ( expected 51.9), which halted any early upside momentum for the Euro.
Once NY got going, the the Euro had a bid tone and the ADP jobs data showed that private-sector jobs rose by 175K in December, just below expectations for an increase of 180K, causing the spike lower in the dollar as the market worried about a below-forecast NFP tomorrow, with the Euro reaching the 1.3555 high, before it sharply turned around on the better than expected ISM Services PMI, which came in at 54, above the expected 53.00.
The choppy action looks set to continue now until the ECB rate decision later today. No surprises are really expected and I don’t think they will cut, which may bring about another topside test for the Euro, but Mario Draghi could well remain dovish by suggesting that the easing path remains open if momentum does not start to pick up. This would limit any real upside for the Euro, which probably means a volatile session, but ultimately ending up not so far from where it is now for some more choppy trade ahead of tomorrow’s NFP. If they spring a surprise and do cut, then we are in for a quick trip to 1.34 and possibly lower.
The points to watch remain pretty much intact today and the session high of 1.3555 is now the first, minor resistance. Above this would see a run towards the first 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(100 DMA/Daily Cloud Base) and then possibly to 1.3635 (38.2%). I would be surprised to see the Euro above her but if wrong, it would head towards the more significant descending trend resistance at 1.3660 and then to the 50% pivot of the move from 1.3892/1.3476 at 1.3685.
On the downside, there is plenty of support now in the 1.3475/1.3500 area, a break of which would see 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.
I think that the game plan will be one of looking for levels to buy dollars into weakness, so wait for potential rallies in the Euro, but take note of the wording from the ECB press conference. All up, it could be that we end up not too far from where we are now as we head towards the US jobs data, tomorrow.
Economic data highlights will include:
German Factory Orders, ECB I/R Decision/Press Conference, US Jobless Claims, Trade Balance
