1.0900, will again act as decent resistance, although the 4 hour charts do point to the chance of a further recovery and given that the market is very short we could see a profit-taking bounce towards the first Fibo resistance at 1.0952(23.6% of 1.1378/1.0822). Above here there is minor resistance at 1.0985 followed by the 100 HMA at 1.1010 and then the next Fibo resistance at 1.1033 (38.2% of 1.1378/1.0822).
Below today’s 1.0822 low, would suggest a run to the base of the long term channel at 1.0800 and then to the shorter term channel (below – brown) at around 1.0750, which fits in nicely with the important Sept 2003 low at 1.0759, and may well be a suitable place to trim back some risk in looking for a bounce in order to re-sell. A break of 1.0750 would probably negate the chance of a bounce and would then open up the chance of a run to around 1.0550, where a support line connecting the Oct 2008/June 2010 lows currently sits (monthly chart below). Below this sits the base of the multi-year channel, currently at around 1.0250 which will again be strong support, but once there, the Euro will inevitably want to take a look at parity.
Given the comparative lack of data today, another day of hovering in the 1.08/1.09 region would not really surprise, although the Chinese CPI, due in Asian trade, may cause a few ripples. Overall the theme of selling into strength remains the preferred plan, although any dips into the 1.0760/1.0800 should be well supported in the near term.
Economic data highlights will include:
US Wholesale Inventories.