EUR/USD
It has been a volatile session for the Euro, although ending up by going nowhere from
this time yesterday. The EUR 8 Bio, Italian bond auction has been held and was seen as a
partial success, in that the demand was reasonably solid, despite the yields being at
unsustainable levels. A French Press report stated that Frances AAA rating could be
downgraded within the next 10 days and the EU Finance Ministers have met in Brussels
to discuss the ongoing problem, including the next tranche of the bailout plan for
Greece. The never-ending argument on how to resolve the issue has seen a plethora of
divided opinion today from a multitude of EU officials. None of it made the issue any
clearer. The usual culprits; the ECB, IMF, EFSF, QE etc have all been at the centre of the
action. On the other side of the Atlantic, American Airlines filed for Chapter 11
bankruptcy, while Consumer Confidence figures had the biggest monthly rise since 2003
to 56 from 40.9.
All this saw the Euro have a quick move up to take out SL above 1.34. A high of 1.3440,
just shy of the 1.3450 resistance, mentioned yesterday, was equally quickly knocked
back lower to where the Euro currently resides, above the session lows of 1.3285.
Technically, not a lot has changed from yesterdays update and the picture remains
somewhat mixed. The 4 hour charts continue to tell us that the potential exists for
another test of 1.3440 and possibly as high as 1.3620. The dailies though, continue to
point lower and rallies look to offer selling opportunities.
On the downside, the gap on the hourly charts between Fridays’ close of 1.3240 and
yesterdays lows at 1.3270 still exists. Ultimately this will be filled in and I suspect we will
see a retest of last week’s 1.3210 low and then eventually we ought to take a look at the
4th Oct low at 1.3145.
Choppy conditions will continue, and for Asia today look to 1.3270/1.3440 again cover
it.
There is a lot of data out today. Highlights will include German/EU Unemployment. EU
CPI, US ADP Unemployment figures, Chicago Purchasing Managers Index, and the Beige
Book. Good luck
AUD/USD
The AUD spiked up through parity in Europe and touched the resistance we
mentioned yesterday at 1.0070, seeing a high of 1.0076, before retreating to
1.0000 in line with the Euro coming off its highs. The divergence on the hourly
charts is giving an early warning that further short term moves higher might run
out of steam fairly quickly. The 4 hourly charts are beginning to approach
overbought levels but the dailies look as though they may be turning higher. All
this leaves the market looking fairly mixed for the next couple of sessions, so,
when unsure, take is session by session and for Asia we have a bit of data to
digest including the CAPEX figures. I suspect 0.9880/1.00050 should easily cover
it before then.
In the medium term, we need to be a little bit flexible. A move through 1.0070
would see an approach to 1.0100/10 level. Beyond here there is not a whole lot
of resistance before 1.0200. I will still stick with selling into strength but leave
SL tight above the 1.01 area.
