EUR/USD to consolidate with bearish bias after hitting 7-month low of 1.3850 this morning. Pair undermined by unwinding of long-EUR carry trades on higher risk aversion, ongoing sovereign debt problems in Europe, low euro-zone January inflation (+1.0% vs +1.3% forecast), still high euro-zone unemployment of 10% in December (11-year-high, up from November''''s revised 9.9%, though below 10.1% forecast). Data focus: 0855 GMT German January manufacturing PMI, 0900 GMT euro-zone January manufacturing PMI. EUR/USD daily chart negative-biased as MACD & stochastics bearish, although latter at oversold, suggesting sideways or lower EUR/USD trading near-term. Support at 1.3830 (July 8 reaction low); breach would target 1.3800 (50% Fibonacci retracement of advance from March 4 low of 1.2455 to Nov. 25 high of 1.5144), then 1.3747 (June 16 reaction low), 1.3482 (61.8% retracement) and 1.3420 (May 18 reaction low). Resistance at 1.3935 (hourly chart), then at 1.3989 (Friday''''s high); breach would temper near-term negative outlook, exposing upside to 1.4052 (Thursday''''s high), then 1.4096 (Wednesday''''s high), 1.4179 (Tuesday''''s reaction high) and 1.4197 (Jan. 25 high).
