Euro Testing Supports After Poor Results

Any chances of a EURUSD bull breakout, as discussed yesterday, have completely evaporated overnight after a spate of poor European fundamental releases.

In particular, the German Retail Sales surprised by posting a dramatic fall of 1.5% versus an expected rise of 0.2%. In addition, Eurozone unemployment rose to 9.6% in Aug although PMI Manufacturing climbed slightly to 49.3.

As a result, EURUSD dropped by 130 pips during the night and is presently testing its support at 1.4525 - see chart.

The British pound fared worse, if anything, with a disappointing PMI Manufacturing release registering a decline to 49.5 this month. As a result, the currency’s recent rally is under pressure with the GBPUSD residing at 1.5970 at present.

USA is due to release a quantity of medium risk data today including personal consumption readings and initial jobless claims at 8.30am EST followed by ISM manufacturing at 10.00am EST.

Bernanke is also scheduled to speak before the House Financial Services Committee and could produce volatility if any of his comments pertain to a tightening policy.