Rate makes two-pip monthly low before bouncing back to the 1.2950 area, rallies again ahead of fix to clear stops said to be resting around the 1.3020/30 area but holds. Rate reaches to tech support around 1.2880 but traders say conditions are still on the thin side. Rate has two-way action into the lows suggesting short-term traders and profit-taking by the shorts. Support at or around the 50 day MA now being tested; the 50 day MA is next level needed to hold for the bulls to feel comfortable this week. Need a rally back over within 72 hours for the drop to be considered a correction and not a breakout. Rate likely has stops building in both directions; overhead resistance likely drops to the 1.3080 area; Long-term bulls are likely still in control of the market and this significant pullback is a buying opportunity in my view. Stops above the 1.3030 area likely today.
Data due Thursday: All times EASTERN (-5 GMT)
3:00am EUR French Flash Manufacturing PMI
3:30am EUR German Flash Manufacturing PMI
4:00am EUR Current Account
4:00am EUR Flash Manufacturing PMI
4:00am EUR Flash Services PMI
5:00am EUR Industrial New Orders m/m
9:00am EUR Belgium NBB Business Climate
Resistance 3: 1.3120
Resistance 2: 1.3080
Resistance 1: 1.3020/30
Latest New York: 1.3005
Support 1: 1.2880
Support 2: 1.2850
Support 3: 1.2820
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