Markets are trading mixed since early Asian session, with Europe down for now and New York heading this way too. The economic data are better than expected these days, nevertheless traders are not convinced on the recovery latest story and always are careful not to over expose themselves in the current euphoric mood.
The EUR/USD is trading much lower this morning and a brief slide towards 1.41 was able to find good support. At the moment the pair is back up towards 1.42 and next level to watch is 1.4230 and 1.4280. Traders are reluctant to commit further on the upside, what with important economic events ahead of us tomorrow like the ADP report which will give us the first indication of the payroll numbers and also Bernanke€™s testimony in front of the Congress. The range of the pair is 1.41-1.43 and we may see a sideways move until the first important event unfolds.
The economic calendar today is almost empty and traders are taking the opportunity to book profits and reposition themselves for the busy week. The data out of UK today were very positive for the pound; however traders did not take the chance to boost the currency further, due to uncertainty of the political situation in Downing Street, as Darling€™s job is at risk after the recent expenses scandal. As long as GBP/USD keeps 1.63 intact, further upside is possible in the coming hours. Later on we have pending home sales from the US which are expected lower than previous month but the news may not find reaction at present as everyone is waiting for tomorrows events.
For now, things to watch is the dollar€™s recent weakness and how it will progress from these levels and if EUR/USD will break on the upside once again, as it held the important 1.41 support. In other markets gold and oil both reversed earlier gains seen last week; however the move was more of a consolidation before further upside occurs. The news that the hurricane season is about to begin and therefore pose risks to several countries, is making oil investors wary and as long as oil keeps $65 as support for now, another wave of gains may push the commodity to $70 in the coming days.
Let€™s see how New York opens and if the dollar will resume its downside trend ahead of important economic events in the coming days. Don€™t forget that euro bulls are waiting in the sidelines for now, as Trichet will deliver his speech this Thursday and may give out signals as to what the next move in rates will be. The forecasts want the ECB to keep rates unchanged but the main question will be if the easing cycle has come to its end or if there is more cuts to follow below 1%...