A drop off in risk overnight fueled by rumors of a crack election in Greece faded as the day went on but the euro continues to trade lower. Sterling was bid this morning as was spot silver with markets awaiting the release of US core durable goods orders.
The euro was lower overnight following the election rumor and a reduced US GDP forecast by JP Morgan, but the EUR/USD recapped most of the losses during the London trading session. German consumer numbers came in below expectations and the EUR/USD dipped to its daily low at 1.4013 before recovering to 1.4080. Interestingly enough, today's low coincides with the neck line of a potential head and shoulders pattern , a long term chart reversal pattern. In the near term, a break of the 1.3970 level could spur declines to the 1.3910 where the 50% retracement lies from the January to May move.
Sterling was bid across the board this morning as the Organization for Economic Cooperation and Development (OECD) suggested UK interest rates will need to be increased. While the report from the Paris based think tank should have little impact on the Bank of England's Monetary Policy Committee, the did spur buying interest for traders to bid sterling higher. Cable rose as high as 1.6240. Initial resistance for the GBP/USD is found at 1.6320 from the broken trend line off of January low. The EUR/GBP fell to as 0.8652 before pulling back to 0.8670. The pair could continue its move lower as the Greek debt crisis keeps the euro on its back foot. A target may be 0.8620, the 61% retracement from the February to May move.
Global bourses were mixed with the Nikkei down -0.57% and the London FTSE trading even on the day. Commodities are higher with silver receiving strong bids, trading as high as 37.30. Resistance for spot silver comes in at $39.50. Support for spot silver is below the $34 level.
This afternoon US core durable goods orders are due out shortly and could be a high impact data release following JP Morgan's trimmed US GDP forecast. Stronger US data would likely feed into USD selling and help to push sterling and spot silver higher.
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