Hardier than expected....

Dovish comments from ECB's Asmussen and Italy's downgrade pressured E$ through the 1.2800 option barrier and sell stop orders to print a low of 1.2755 yesterday. To add on to the bearish tone, it closed at 1.2780, a trigger for Goldman Sachs to cut loss on their long euro call. This morning, China's weaker than expected trade figures sparked a sell-off in the AUD, pulling the E$ lower but it only managed to print 1.2765 low before rebounding (A$ staged an even more spectacular rebound). The next focus will be minutes from the FOMC meeting which will be released at 2am (Sin/HK, 11 Jul) and Bernanke will be speaking at 4:10am (Sin/HK, 11 Jul). I have in my previous updates expressed my apprehension of getting overly bearish E$ when closer to 1.2800 and I am still standing by that view at this point in time. Though I am not expecting a major reversal here but there are increasingly more technical signals that support a deeper rebound before E$ resumes its bearish trend (see chart). This view will be invalidated if 1.2745 is broken with a close below. In the same vein, I do see a A$ rebound to 0.9350/80.

Europe order book:
Stop loss: 1.2735/30, 1.2745/40 and 1.2860/65
Limit: 1.2700 (opt), 1.2755/45 and 1.2880/900

Primary trend: Bullish
Intermediate trend: Range between 1.32 to 1.24
Minor trend: Mildly bullish (corrective)

Technically, shorter intraday indicator is in o/b level but the longer intraday ones are only just coming out of the o/s territory. The daily indicator is still in o/s condition. Shorter intraday momentum indicator is suggesting consolidation which at current level of 1.2805, there is still some room on the upside. But longer intraday to daily indicators are still pointing lower. Bullish convergence signal has emerged and that also has increased the probability of a near term bottom. Expected trading range 1.2780/90 (stronger support at 1.2750) to 1.2880/90 (stronger at 1.2920/30)

E$ Daily chart - Though E$ closed below 1.2800 yesterday, I still can't get overly bearish, at least for now........