EURUSD: Euro heavy on Greece concerns. US$ underpinned ahead of Yellen testimony by FX Charts

The Euro headed mildly lower after the slightly disappointing German IFO business climate rose to a 7 month high of 106.8 in February, but missed expectation of 107.2. Doubts over whether Greece will be able to overcome their debt issues, despite the 4 month extension agreed to on Friday also weighed on the Euro.The dollar was generally underpinned as traders await Janet Yellen’s testimony to Congress, hoping that there may be a hint on the timing of an interest rate hike, although weak US New Home Sales stopped it in its tracks and caused a minor reversal but further gains were limited once Greece delayed its list of reforms for the Euro group until Tuesday morning.

Technically there is little change while the Euro remains inside its 3 week range of 1.1260/1.1530 and in the short term the bias stays neutral.

While the consolidation continues, it has at least allowed the daily charts to unwind from their oversold condition and I suspect that we are heading for a break at some stage this week, possibly later today if Janet Yellen does provide any insight to the timing of a rate hike. Before she testifies, there will be some important data from the EU, with both the German GDP and the EU CPI due for release, while Mario Draghi will also be speaking, although it is not directly related to the markets. The US Consumer Confidence will also be released.

Technically, despite being a bit lower, there is not too much change in outlook. Below today’s 1.1295 low would test the bottom of the range at Friday’s low (1.1278) which is closely backed up by the Fibo support at 1.1260 (61.8% of 1.1097/1.1533), but a break of which would head towards further bids at 1.1220 and 1.1200. Below there would see a run towards the trend lows (1.1097) and eventually beyond towards 1.1000 and lower.

On the topside, 1.1395 has been the session high. A break of 1.1400 would see a return towards Friday’s 1.1428 peak, above which the Euro could then potentially squeeze on towards Thursday’s session high of 1.1449, where we have a minor double top. The Fibo resistance at 1.1437 (23.6% of 1.2570/1.1097) will again be a hurdle but if the Euro can make a sustained run above it, then beyond 1.1450, we could head towards, the Feb 7 high of 1.1485 and possibly on to 1.1500.  If we were to see a move beyond 1.1500, then we would get a run towards the 3 Feb peak at 1.1533 above which would see further sellers at the nearby Fibo resistance at 1.1542 (76.4% of 1.1679/1.1097) and then maybe towards 1.1600 (daily Kijun) and on to 1.1655 (38.2% of 1.2569/1.1097). If seen, such a rally could be seen as a potential sell opportunity, with a SL left on all short positions to be left above the 21 Jan high of 1.1680.

For the coming session I suspected that we are going to remain in the 1.13/1.14 range until Yellen speaks (although the EU data could quickly change that theory), but the overall view remains unchanged, this being to trade from the short side, looking for an eventual break of 1.1260 and a move towards 1.1100 and eventually lower.

Economic data highlights will include:

German GDP (Q4), EU CPI, Mario Draghi Speech, US Consumer Confidence, Janet Yellen testifies to Congress..

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