Asian markets were mixed today as investors eagerly await for Fed Chairman Ben Bernanke's testimony before Congress tomorrow. Traders are looking for assurance that Thursday's discount rate hike was not a shift in monetary policy but rather a technical move towards "normalization." Markets will also pay close attention to the language used in his statement with regards to a timeline for possible hikes in the Fed funds rate. European markets were marginally weaker across the board on weaker than expected data out of Germany, as well as bearish remarks from the BOE.
Euro Volatility
The euro saw considerable volatility early in the London session today. The single currency rallied to the daily pivot at 1.3690 before relinquishing its gains and sliding down below the 1.36 handle, settling around 1.3570. Lower than expected data from the IFO Business Climate survey showed a decrease in sentiment for the first time in 11 months. The euro's upside break of the upper bound of the downward channel dating back to Jan 13th was short lived on the news, putting pressure back on the euro. If the 1.36 resistance holds, the dollar may be back on track to advance further against the single currency. Demand lies at 1.3545 and lower at the 1.35 figure, which represents the 61.8% Fibonacci extension taken from the Feb 18th highs through today's. A break here makes way to lower support levels at 1.3480 and 1.3410. Upside momentum strengthens with a break of 1.3690 with subsequent ceilings at 1.3740, 1.3840 and further at 1.3875
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