EUR/USD
For the third day in a row the Euro sits at 1.3400 as the market awaits the EU
Interest Rate decision tomorrow and the EU Summit on Friday. The S+P warning
of the potential downgrade of all the EU members saw an early dip in markets
once Europe opened (Eur down to 1.3332), before a recovery to 1.3420 and
then choppy trading conditions either side of 1.34 for the rest of the session.
S+P again capped any Euro strength by stating that the AAA credit rating of the
EFSF could be affected alongside the 15 nations backing it, which includes the 6
nations that currently have their own AAA rating.
The day saw the usual mixed comments from various official sources, but really
not adding very much of clarity to the situation. The general rhetoric though,
appears to be building itself for a positive outcome on Friday, so the danger
maybe on the downside if they fail to reach a realistic solution – which should
really come as no surprise at all.
In Equities land, the Dax finished down 1.27% and the CAC40 -0.68%. The S+P is
currently +0.5% going into the last 30 minutes of trade.
Technically there is no change really form yesterday as we continue to move
around in neutral territory.
Resistance at 1.3550 remains intact & above here 1.3610 (38.2) and 1.3730
(50%) act as Fibo resistance of the move down from 1.4247/1.3210. Downside
support is at 1.3325 and then at 1.3260 and 1.3210. The charts continue to be
too mixed to have a firm view, and although the 4 hour charts are still fairly
neutral, the daily indicators are do point towards the possibility of further
strength. This though, could change very quickly on the first negative word from
the EU. Play it safe and leave tight SL.
AUD/USD
The dip to 1.0155 following the RBA cut saw the downside well supported and
the AUUD has recovered to familiar ground around 1.0250. Today looks likely to
be more of the same as the market generally goes on hold, in anticipation of
Fridays EU summit.
Technically the AUD remains unchanged.
1.0300/30 remains a hurdle and beyond here, 1.0400 is a target, but 1.03/1.04
should be difficult to overcome given the looming presence of the 100 DMA
(1.0313) and the 200DMA (1.0406).
The downside, for now, looks to be well protected at 1.0150 following the test
and rebound from this level today, and below here, 1.0075 (Fibo).
Choppy conditions look likely to continue, and the Asian session appears t be
confined again in the 1.02/1.03 range. While the 4 hourly charts continue to
unwind their overbought conditions the dailies are still hinting of further tests
to the upside. I am pretty uncommitted either way right now and it appears we
will see little of directional importance until we know more about the EU
outcome on Friday, although the GDP number today may provide us with some
action if the figure is a major surprise. (Exp +1.1% QoQ.)
