EUR/USD is currently at 1.2926, near session lows after peaking at 1.2945 Asian high, leaving the rate flat since NY close. The pair started with some risk appetite in early trade helped by U.S. vice-presidential debate but the IMF-WB-G7 meeting headlines out of Tokyo, stating Asia "should remain the global growth leader, yet still "considerable" tilted to downside, saw USD pare its losses, specially against B. Pound.
A relatively quiet London session lies ahead, with no EZ sovereign debt auctions as usual on Fridays, and only minor EUR data related coming out, starting with French current account at 06:45 GMT, followed by the Netherlands trade balance at 07:30 GMT, Italy CPI at 08:00 GMT, and EU industrial production 1 hour later.
The IMF-WB meetings will keep going throughout Sunday, with BoJ governor Shirakawa to speak at 12:20 GMT. Special attention might come from Spain, as the nation government holds its regularly weekly meeting, and markets expectations are growing on the country asking for the bailout after S&P downgraded Spain's credit ranking to one notch away from junk status.
According to Ivan Delgado, Head of Asian Analysts at FXstreet.com: "The S&P's downgrade of Spain's debt, rather than spooking investors away from buying the EUR/USD, strengthened the notion of a trading psyche, in which, by connecting the dots, the market is now pricing in reassurance over the activation of the OMT ECB program for Spain."
On the EUR/USD front, the 200-day MA was picked by market players to enter solid bids, lifting the spot rate off lows at 1.2825 all the way up beyond the 1.29 pre-S&P announcement. The Finnish government giving the "green-light" on a "single bank supervisor" solution to bailing out the EU's troubled banks helped to firm up the pair above mentioned round figure.
"Technical outlook remains bullish according to intraday time frames, although indicators had lost early momentum, reflecting recent lack of volume," says Valeria Bednarik, Chief Analyst at FXstreet.com. "Sentiment will be the name of the game this Friday, with market inclined to take profits out of the table ahead of the weekend."
Immediate support to the downside for EUR/USD comes at recent session lows/Wednesday's highs 1.2910/20, followed by Oct 03 lows at 1.2875, and yesterday's lows/200 day SMA at 1.2825. For the upside, closest resistance shows at yesterday's highs 1.2951, followed by Oct 02 highs at 1.2970, and Tuesday's highs/past Friday's lows at 1.2991.