The September Euro avoided posting a new low for the move this morning, but is making little headway with recovering from yesterday’s sharp downdraft early in today’s session. Euro zone data failed to provide the market with any decisive direction, as a soft inflation reading and in-line Unemployment diminished the impact of rising economic sentiment readings. Next week’s ECB meeting is starting to cast a long shadow over the Euro, however, as officials are likely to talk up accommodative monetary policy at the same time as the market prepares for the start of Fed tapering measures. With problems in Italy and Greece still smoldering and with global risk sentiment staying subdued going into the holiday weekend, it will be difficult for the Euro to regain strong upside momentum. The September Euro may find near-term support around the 132.22 level this morning, and may slide down to a new 4-week low if this morning’s US data exceeds market expectations.
Technical Outlook
EUR (SEP): Declining momentum studies in the neutral zone will tend to reinforce lower price action. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The close below the 2nd swing support number puts the market on the defensive. The next downside target is 131.3625. The next area of resistance is around 133.0350 and 133.8624, while 1st support hits today at 131.7850 and below there at 131.3625.