28 July. Euro under pressure. More downside to come?

Due to travel commitments, the daily outlook this week will be limited.The coming week is going to be a big one for data. It will be busy on most days but the focus will be on Wednesday’s FOMC meeting and US GDP, Thursday’s EU CPI & Unemployment details and then on Friday, the global PMI’s and the US Jobs/NFP numbers. Plenty of opportunity there!

The Euro fell to levels last seen in November 2013 and the dailies suggest that there is still plenty of room left in the move. Having fallen to meet the support at 1.3420 (200 WMA), this may hold it up for a while, but below there, and then below 1.3400 would head to 1.3370 (50% pivot % of 1.2754/1.3995) and eventually to 1.3340 (100 WMA) and 1.3294 (7 Nov ’13 low).

The 4 hour charts are also pointing lower but are oversold and so we still need to allow for a short squeeze back towards 1.3500 where the 200 HMA lies. Ahead of that, minor resistance at the 100 HMA sits at 1.3475. A break above 1.3500 would trigger plenty of stops, potentially taking the Euro up towards last week’s top at 1.4548. I don’t really see it beyond here, but if wrong, above 1.3550, would head to meet sellers at 1.3570 and 1.3585, ahead of 1.3600. Given the ongoing negative look of the daily indicators, I don’t really see it back above 1.3600 for quite a while now, but if wrong, and the Euro does head higher over the next couple of days, offers in the 1.3640/50 area remain solid, where the minor Fibo resistance at 1.3646 (61.8% of 1.3700/1.3562) would provide strong resistance.

In the bigger picture, with the wedge formation now having been broken on a weekly close basis, we could be at the start of a larger move down, potentially targeting the 9 July low 2013 at 1.2754. Don’t get too excited yet, if it turns out to be correct, I think it will be a choppy and relatively orderly progression and there should be plenty of opportunity to get on board into the odd, intermittent short squeeze.

Sell rallies seems to be the plan.

Economic data highlights will include:

M: US Composite/Services PMI (provisional), Pending Home sales, Dallas Fed Mfg Index

T: US Consumer Confidence

W: EU Consumer Confidence, Business Climate, Economic Sentiment, German CPI, US GDP, Personal Consumption, FOMC Meeting/IR Decision/Statement, ADP employment data

T: German Retail sales, Unemployment, EU CPI (provisional), Unemployment, US Jobless Claims, Chicago Purchasing managers Index

F: EU Mfg PMI’s, US Personal Consumption/Income/Spending, Unemployment, NFP, ISM Mfg PMI, Construction Spending, Rts/Michigan Consumer Sentiment Index.