Great Graphic: Euro and Sterling

These Great Graphics come from my Bloomberg.  The first is a daily bar chart of the euro with the 200-day moving average plotted.  I tend not to think of the moving average to be support or resistance, but really more of a mile marker.  As I noted in the previous post the euro has not traded above its 200-day average since last October.  It comes in now near $1.2835.  The early momentum the euro enjoyed, which carried it to a marginal new high has stalled a bit, but this is likely to provide early NY participants with a new buying opportunity.  Only a break of the $1.2750 area would give the late bulls a pause.  

The daily bar chart of sterling shows it has led the euro.  Its lows were on June 1, while the euro's low was not recorded until July 24.  It also shows that sterling has been holding above its 200-day moving average since breaking convincingly above it on August 21.  Sterling, like the euro, briefly rose through last Friday's highs before consolidating late in the European morning.

Support is likely to be seen near $1.60, but even if there is some minor penetration, there does not appear to be any compelling technical evidence that a high of any import is in place.  The FOMC outcome, one of the drivers, is still two-days away and many fund managers still are underweight Europe, when those assets are now generally out performing.  That said, the UK FTSE is up about 3.7% here in Q3, which is among the worst performing bourses in the G10.    Gilts have also generally under-performed other European bonds over the past three months, except for bunds.