On the economic news front this morning in Europe, three announcements have been released giving a little bit of clarity to the economic health of Europe. The first one, the French Consumer Price Index, was released at 0.1%, which was a miss. Economists were looking for a reading of 0.2%.
Also coming out and missing the estimates were both the French Industrial Production and Italian Industrial production numbers. The French managed to post a reading of 0.1%, which was below the estimated 0.2%, while the Italians came out with -2.1%, far below the estimated -0.5%.
While FX traders may not be focusing on these numbers entirely, they do not add weight to the case for Euro bullishness. Of particular note recently have been the recent concerns over European sovereign debt. As the spreads between the Irish, Portuguese, Italian, and Spanish bonds widen over the German bonds, it shows a concern over the same issues we had 9 months ago.
Focusing on the charts, we can see that the recent area FX traders have been battling over has been the 1.37 to 1.42 range. As of this writing, FX traders are currently testing support at the 1.37 level. It should be noted that the 1.37 handle has been very strong support over the last few weeks, and must be broken if we are to see a move to the downside.
Any move upwards from here is likely to be somewhat messy, as there is no real clear resistance level above. In fact, on the larger time framed charts, it could be said that the nest 300 pips could be thought of as a messy resistance zone.
With the recent concerns in Europe starting to gather more and more press coverage, it is likely that a trigger for a new position in the Euro will be to the downside, if a daily close below 1.37 can be achieved.